After looking long and hard, scouring the neighborhood for the perfect house, you find the house of your dreams. Now comes probably THE most frequently-asked HOME BUYER QUESTION: “How Much Should I Offer?”
According to the National Association of Realtors, it takes 12 weeks of house hunting … previewing an average of a dozen homes… before a buyer finds the right house. You may have looked longer … and seen more properties than the average buyer. Regardless, after viewing and discarding, you have a pretty clear picture as to what’s out there and what you like, how homes are priced, and what you’re likely to find.
When you come to the “right” house, deciding what price you should offer for it might set your heart racing. While you certainly don’t want to overpay, you don’t want to lose the house. You may feel like a fish out of water. Before your Realtor prepares the offer, sit down together and take a look at what’s sold recently in that neighborhood. The comparable sales (homes that are similar to yours, in terms of style, size, number of beds and baths, age, location,school boundaries, upgrades, land, and property condition) will help paint a picture as to the value of the particular house you’re interested in buying. You probably already have a pretty good idea as to the value of what’s currently ‘for sale’… having viewed other properties for sale. You may have visited some of the homes that recently sold as well.
Nobody wants to overpay for a house…. Not you. Not your Realtor. Not your Lender! No one wants you to overpay (…except perhaps the seller!) Your lender will not give you a loan for a property that’s priced beyond fair market value… so there is a system of checks and balances in place to see that you don’t get ‘taken’. Assuming your Realtor includes the appropriate terms and provisions in your contract, you can walk away if the house doesn’t appraise…. or alternatively you may find yourself in a position to renegotiate the sales price.
That said, there are a number of points should you consider when deciding what price to offer. Here’s where you and your Realtor need to have a heart to heart. How much do you want , need (or love) the house? If it’s the house of your dreams, and you haven’t found anything even remotely close, you won’t want to submit a terribly low offer and risk losing it. If the house is a dime a dozen though and you have a number of other options, you’ll have wiggle room to negotiate… because of your willingness to walk away.
Are you paying cash? Have you already been pre-approved for a mortgage? If so, your offer will more attractive.
There are a few other things to factor in, as you and your Realtor discuss “value” and decide what your offering price should be:
What is your time frame? Do you need to lock-in something and settle-in quickly? Do you need to sell another property first, or make this home-purchase contingent upon selling ? Is this seller under the gun, having already relocated or on the verge of foreclosure? Are there foreclosures or short sale properties in the area that could potentially drive values down… or is there something planned for the community that will likely enhance property value? Have the current owners already packed and moved, or are they boxed and ready to go? Conversely, is there interest in the house from other buyers? Are you competing against other offers already on the table?
What are the improvements that have been made to that particular house (upgraded kitchen and baths… a new roof… phenomenal landscaping)? Keep in mind that paint and staging are really cosmetic items… so while they can (and do) add appeal and make a house esthetically pleasing they add relatively little monetary value. Paint is cheap…and you can do it yourself relatively inexpensively. Look beyond the staging: Furnishings and accessories are ‘fluff’. Furniture will be packed up… and moved out… along with the seller.
Things that add intrinsic or monetary value include a pool, an addition, an extra room (although not necessarily equal to what the seller paid). A seller may look to add $40,000 if he/she spent that for remodelling and improvements, but that price tag may not be warranted. Improvements and upgrades are conveniences for new buyer. They may not be what you, as the new homeowner might have chosen. And they don’t necessarily correlate to added ‘value’. Appliances, once used, decrease in value. On that basis alone $40,000 spent on a kitchen renovation doesn’t necessarily translate to a $40,000 higher price tag. Added value, and the seller’s actual expenditure, often differ from one another, and your agent can shed more light on that for you.
Each and every house has unique features… pluses and minuses. And determining an offering price is specific to each property and each circumstance. Call us if you are looking for a buyer’s agent. We are happy to help with any of your real estate needs in Miami, Coral Gables, Pinecrest and the surrounding areas… and we can certainly refer you to a top agent if you are considering buying elsewhere. Please contact us here or phone us as 305-793-1365.