Clients often ask me what they should consider when making an offer on a home. There are many factors to consider.
The circumstances surrounding every home are different.
- How long has the home been on the market?
- Has the price dropped already? How much and how many times?
- Is the property vacant?
- How many homes like it are on the market?
- How long is it taking for them to sell?
- What did the sellers pay for it?
- Can it be determined how much money the sellers owe on the property?
- How fast does the seller need to close and can the buyer accommodate that?
Besides all these factors, the single most important thing to consider is what similar properties have sold for over the past five or six months. The more recent the sale the more valuable the information. Asking prices are basically worthless data.
I also always suggest to buyers that we have a negotiation strategy that we have thought out before making an offer. Just making an offer and seeing what happens is not the best approach.
Making low-ball offers is not effective either. Some buyers think that it cannot hurt to make a ridiculously low offer and to see what happens. It's usually a bad move. The response from the sellers usually is to not make any counteroffer. If the buyers are actually interested in the home that forces the buyers to make another offer, effectively bidding against themselves and essentially tipping the sellers off that they're really interested.
A recent Boston Herald article discusses making offers for real estate.
"Find out what comparable nearby houses have been selling for, as well how rapidly they’re selling (assuming they’re selling at all).
"A good buyer’s agent can help you with this."