You've seen every house on the market within twenty miles, and you've finally found one that speaks to you. You may be feeling the pressure to make an offer before someone else scoops up your dream home, but it's important that you stop and take some time to make a plan. Here are three game-changing factors you need to consider before making that first offer on your new home.
Do You Know the Market?
Before you can make an offer on a home, you have to figure out what it's worth. This can be tricky. The seller will obviously have an asking price, but it could be out of the appropriate range. The house will have an appraised value, but that becomes meaningless if someone is willing to pay twice as much. The more information you have on the local market, the better. You should be able to answer these questions.
What are comparable houses being sold for?
Find out what it has taken to buy other houses in the area. Look at homes that are the same size, age and style of the one you are considering.
Are area homes going for more or less than the asking price?
If houses are going over asking price, you are probably going to have to bid against another buyer.
Do You Have Your Financing Together?
Your offer is going to be more attractive to a seller if you can show that you have all your ducks in a row when it comes to the money. You have more leverage if you've already been approved for a loan.
You should also consider whether or not to offer cash. If you can pay for the home outright, you may be able to negotiate a lower price. However, this strategy may hurt you in the long run. Personal finance website Investopedia reminds buyers that it's important not to have all your cash tied up in a home in case you need the money for repairs and other expenses.
You may also want a mortgage because it is an opportunity to build your credit.
What Do You Know About the Home and Seller?
Do some investigating and consider the details. This will help you understand how motivated the seller might be and what type of offer the seller may take.
Why is the seller moving?
A seller simply in the market for a new house is not as motivated to sell as someone who will be living in another state within a few months.
How long has the house been on the market?
If the house has been sitting on the market for more than six months with no buyer, the seller may be willing to take a lower offer. If the house is new to the market, you are probably going to have to pay close to the asking price.
Have there been other offers?
In some locations, you can get information on previous offers that have been made on a home. Your real estate agent can look this up for you. Even if the information isn't available where you are buying, a connected agent may be able to find out what kind of offers, if any, have already been rejected by the seller.
When you understand the market, can guess the level of motivation of the seller and know your financial plan, you can make an educated offer on the house you want. Look to your real estate agent for guidance and remember that a first offer is just that. Be willing to negotiate and be willing to walk away if you can't come to an agreement. Then simply enjoy this huge step toward purchasing your home. For more help with buying a home, contact a real estate company like Castline Properties, LLC.