What is a reasonable offer on a house?
When you are buying a home, it can be tricky to come up with an offer for a home you really want. Should you bid high? Bid low? Somewhere in between? Home buyers have a lot of anxiety over deciding what is a reasonable offer on a house.
To help answer this question, we enlisted real estate expert Bill Gassett. Bill is a thirty-three year veteran of the real estate industry and is well known in real estate social media circles due to his writing at Maximum Real Estate Exposure. Bill also has been mentioned or a featured author for many publications including the NY Times, CNBC, The National Association of Realtors, Credit Sesame, RIS Media and Inman News, among others. Currently, Bill works for RE/MAX Executive Realty in Hopkinton, Massachusetts.
How should a home buyer figure out what is a reasonable offer on a house?
What to offer really comes down to knowing the market. The first thing that you should do when you become seriously interested in a property is to have your real estate agent run what is called “comps.” Comps is short for comparable sales. Your buyer’s agent should be doing an evaluation for you of the recent sale prices for property that is comparable to the one you are considering buying.
Comps will tell you things like, is the property priced correctly? Is the seller being realistic? The comps will help give you and your agent an excellent idea of what you should offer.
You want to avoid overpaying, and also you don’t want to offer more than you can afford or get a mortgage for. Before you put down your earnest money deposit, it’s essential to set your limit on what you will pay for any home.
What are some effective strategies you’ve seen when deciding on what is a reasonable offer?
If you are working with a good real estate agent, they will have the pulse on the local real estate market. Are homes selling ultra-fast or are they languishing on the market? It is essential to know what is going on locally. Some homes fit into a price point where sellers are seeing multiple offers due to high demand. You have to consider, is this the price point that everyone wants?
If homes are selling quickly and you have lost out on other homes, it might be time for a new strategy. Many buyers find themselves doing things like waiving an inspection or giving the seller the exact closing date they want to be a more competitive bidder. You’ll want to weigh carefully any trade-offs, and also discuss with your agent.
What are some mistakes home buyers make when coming up with an offer?
There are a few common things that buyers do that can quickly turn off a seller. The most common thing that’s a turn off is starting an offer at a very low price. Especially if you are in a market that favors sellers, it’s essential not to insult them. The last thing you want is to make the seller feel like they don’t want to work with you. A low-ball offer could make them second guess other things like how reasonable you’ll be after the home inspection.
Another common mistake is making the earnest money deposit lower than the norm. When you write things into an offer that are not customary, red flags go up.
Understanding what’s a reasonable offer on a home really comes down to knowing the market inside and out. Finding a local real estate expert and relying on their guidance is an essential consideration in the process.
If you lose out on a few homes to other buyers don’t get discouraged. Keep your best foot moving forward and you will eventually land your dream home. Best of luck!