How Much to Offer For a Home?

This is probably one of the hardest questions homebuyers face throughout the entire home-buying process. It’s not uncommon for even experienced homebuyers and investors to feel somewhat uneasy about laying that offer on the table.

Unfortunately, there is no magic formula to calculate the perfect offer price. Every individual buyer will need to do a bit of a research in order to make an educated offer. A rule of thumb to follow, however, is to make an offer that is within your range and that will not offend the seller. Below are some practical pointers to help you do your homework:

• With so many resources available on the web, it’s easy to find databases on home purchase prices in your local area. Spend some time surfing the Internet to look up homes that sold within your price range, and cruise around your dream home’s neighborhood to find out how fast and how close to the asking price homes are selling. Your buying agent can also provide helpful comparable listings.
• Get pre-approved for a mortgage loan to increase your purchasing power. By knowing how much you can afford, you can make your offer and negotiate with confidence–which can also give you an edge over other bidders.
• Find out as much as you can about the property and the seller’s motivation. Look at the inside of the home and ask about existing reports, such as termite, roof and house inspections. It’s also helpful to know that the sellers might settle for a lower price if they have already bought another home or they want to close quickly for other reasons.