Home Buying: The Offer

Buying a home can be hard. First, you must find the perfect home, possibly sell another home, and then most importantly make the right offer when you do find that perfect home. Most people look at offers simply as how much lower than the asking price should an offer be when really there are many factors that need to be considered. Some of the factors that can be used to determine how much to offer for a home include comparable home sales, time on the market, and variables in the offer to purchase.

A good place to start is by carefully reviewing comparable home sales in the same area as the home you are interested in. Your real estate agent can provide you with a comparable market analysis which will give you a good idea of the homes value. Don't make the mistake of using tax value as a measure of the homes value. Tax values are not a good assessment of your home's actual market value. Tax values are done periodically and only for the purpose of taxation. While the fair market value of a home is the highest amount that a buyer will pay for your home.

You can also ask your real estate agent to find out how long a property has been on the market to help gage the seller's motivation. A seller of a home that has been on the market a long time might be more motivated than a seller who has just listed their home. It's also important to know who is selling the home. If the home is owned by a bank, you might be able to offer a lower price as the bank won't have an emotional attachment to the house.

There are also many variables in the offer to purchase that can make one offer more attractive than another offer. For instance, a cash offer with no contingencies might be more attractive to a seller than a higher offer that is contingent on a loan or the sale of another home. So keep in mind that an offer is more than just the price of the home but all the other variables in the offer to purchase as well.

Finally, an offer that is too low can often insult sellers and make negotiations difficult, while too high of an offer could mean not getting the lowest price possible. So if you are truly interested in a property then it's important to make a serious offer based on careful research and the advice of your buyer's agent.