Buying a house is filled with difficult moments.
One of the most difficult comes after you've found that perfect house... now you have to decide how much to offer. You're faced with a key question: what is this home's real value? And, of course, the other half of the equation: what will the owner accept?
An experienced real estate agent has probably already supplied you with comparable properties or "comps". These are properties similar to the one you want to buy that have sold recently and are comparable in terms of size, features, location, and condition. Looking at these comps with your agent will help you get a good feel for the market and your agent should be able to help you understand how your prospective home measures up.
An important factor is that most homes sell for 5-6% below asking price, which means that most owners set their listing prices higher than what they expect to receive at closing. And many buyers, knowing this, offer less than the listing price as a first offer, expecting the owner to haggle a bit and meet them in the middle.
A typical scenario might involve a house listed at $275,000 and an initial offer of $250,000. The eventual contract, in this case, might be for $265,000.
Keep in mind that more desirable properties might attract multiple offers and an initial offer that's too low might be the difference between success and failure. Conversely, a property that's sitting vacant and has been on the market for a long time might mean you can adjust your first offer downward.
The important thing is to gather as much information as you can from a variety of sources.
Questions? Contact us today!