Finally, you’ve found the ONE, your dream home, or maybe it meets most of your criteria but most importantly you and your spouse agree on it. Time to put in that offer! Just one problem, WHAT do you offer??? Of course, you want to apply some logic to this offer price and come up with some questions for your agent. In this blog, I’m going to cover the factors that DON’T really matter to you when coming up with your offer price.
- Why are they selling it? Don’t ask this question. Majority of the time it’s none of your business why a seller is selling. They are not required to tell you. And even if they tell you how do you know they are telling the truth? Whether the property is overpriced, underpriced, or priced right the market will dictate when the offers come in or be apparent as the property continues to sit.
- What they bought the property for. Well, they only bought the property for $X about X years ago. How can they ask for so much? Again if the market is dictating that their property in its current condition and location is worth what they are asking, it will move. Don’t concern yourself with how much they bought the property for. Don’t have sour grapes because you weren’t able to buy it for the price they bought it for. Yesterday’s price is not today’s price.
- Maintenance updates to the property. Yes, while it’s nice to have brand new or recent maintenance item updates such as HVAC, windows, roof, etc. It doesn’t necessarily justify a premium price on top of what other similar properties are selling for. At the same time, if a property has outdated mechanicals, windows, or an older roof but all of these items are still functioning and have no major flaws. Then it doesn’t really justify offering a lower price as well because of these items.
- What’s the seller’s back story, occupation, religion, or ethnicity? You should already know that these questions are not relevant to your offer price. In addition, they can violate federal fair housing laws. Do yourself a favor and don’t ask these.
- Did someone die in it? Yes, weird question, but buyers ask. Just because someone may or may not have died in the home should be a non-factor in the offer price. And in some states, sellers aren’t required to disclose this information anyway.
- The list price! Yes, the LIST PRICE doesn’t really matter. You as the buyer owe it to yourself to do your due diligence to determine if the seller’s list price is correct. Ask your buyer agent to help do the research and run comps on similar sold properties. You need to justify that the seller’s list price is correct. If you find that the list price is well below what the value of the property should be per the market, determine why? Is there something wrong with the property? If it’s a fixer-upper then that makes sense. If the property is in decent shape or great shape and the list price is unusually low aka too good to be true. It could be the seller and listing agent are intentionally pricing the home low as a sales strategy to get maximum buyer exposure. Meaning crazy amounts of showing requests in an attempt to create a bidding war. On the other hand, if the list price is ludicrously high, then you can offer the price that your research justifies and see how the seller responds. If they decline it, your agent can ask their agent to justify the price. If they don’t respond then it’s likely a seller who doesn’t care what the market is saying and they are just dreaming that someone actually comes in and buys their home at the price that they think it’s worth.
In conclusion, when making an offer on a home, focus on the actual market value of the property and avoid being influenced by irrelevant factors related to the seller. Doing so will ensure that you’re making a fair offer based on the property’s true value per the market conditions.