Important Questions To Consider Before Making An Offer
Trying to make an offer can be a nerve-racking step in the homebuying process. While no one wants to overspend for a home, your offer should be reasonable to encourage a seller to accept it, as well as competitive with other offers.
While there is no one-size-fits-all approach to determining an offer price, there are a few things you should ask yourself, your agent, or even the listing agent. The answers to these questions, taken together, can help you arrive at a more informed (and hopefully more successful!) offer number.
How much did the seller pay for the house before making the offer?
Although the initial purchase price may have little to do with the current value of the house in many circumstances, it’s always a good idea to inquire.
For example, if the seller purchased the property approximately five years ago and the markets haven’t substantially risen or fallen (and the seller didn’t perform any changes), the price shouldn’t be too far off from the original. Finding the value might sometimes help you in negotiating a better offer.
It’s also important to ask them why they’re selling the house if they just acquired it—if there’s something the seller didn’t like about it, it’s important to get the inside scoop.
Are there any foreclosed homes for sale near the house you’re considering?
Perhaps you fell in love with the house itself, or perhaps you fell in love with the location. If the latter is the case, you have a strong possibility of finding a comparable property at a significantly lower price if there are foreclosures for sale in your desired community.
It’s usually a good idea to be aware of your surroundings, and if your agent alerts you to some local foreclosures, it’s absolutely worth considering one. Moreover, the presence of foreclosures in a certain community creates competition, which may allow you to make a lower offer on the house you want.
What is the value of the property you’re making an offer on?
This is obviously self-evident, but you should receive an accurate estimate of how much the home you want to buy is worth in today’s market.
Your real estate agent won’t tell you an exact figure to submit for your offer, but they may give you a reasonable estimate by telling you how much “comps” (or comparables) in the neighborhood recently sold for.
How long has the property been for sale?
This is connected to the previous question and is equally important to verify. If the house has been on the market for a few months, it might be a clue that it is overvalued. It might possibly be a slow market or a location where people aren’t seeking to buy—in which case, you should ask yourself why.
How flexible is the seller on the asking price?
Although it may appear to be an inappropriate topic to ask, the seller’s agent should give you a clear answer: either there is wiggle room or there isn’t.
It’s far more ideal to have an inside grasp of how flexible the seller may be with the asking price rather than simply insulting the seller by offering significantly less than what they believe their house is worth.
Is the seller willing to help cover the closing costs?
In the same way that you should find out whether the seller is flexible with their asking price, you should also find out if they are ready to make any concessions. This includes assisting with closing expenses and paying for necessary maintenance. Knowing this sooner rather than later can help you budget as you move closer to closing.
Are there any previous or ongoing problems with the house?
Even if the house appears to be picture-perfect, you should take off your rose-colored glasses and recognize that there may be more to it than meets the eye.
Because you’ll be obtaining a home inspection anyhow, it’s smart it to ask the seller about any problems they’re aware of so you can double-check them during the inspection. Even if the house appears to be in good condition, earlier damage (such as a fire that created structural problems) may not be readily obvious if it is concealed behind walls.
Are there any plans for changes in the nearby area?
It’s usually a good idea to know if the area you fell in love with before purchasing your house will remain the same once you move in.
Are there any projected plans to expand commercialized areas near the property, which might increase traffic, or simply general construction, which could cause noise all day? Perhaps a new school is in the plans, which might increase the value of the home.
What is the seller’s timeline?
Some sellers are rushing through the process because they need to relocate for a new job or are (sadly) going through a divorce. In these situations, people may be inclined to accept the first acceptable offer they come across.
This means one of two things: either someone else will beat you to it, or you may go in at a lesser price in the hopes that they will take it to hurry the process forward.
A seller, on the other hand, may not be ready when you are. They might be waiting for the new house they’re moving into to be completed. Knowing the seller’s chosen settlement date before making an offer can assist you in easily planning your next steps.
Have any other offers been made?
This is the important question. If other offers were made on the home you want, you should find out what they were and why they were rejected.
Don’t assume that another person’s offer was rejected only on the basis of price, making you feel obligated to increase your offer—there might have been other factors that contributed to the rejection (like settlement timing, no pre-approval letter, or a disagreement of terms).