Ready to Make an Offer? Unique Negotiating Strategy Key to Pricing it Right
By Keith Loria
Searching for your dream home is a time-consuming process, one that doesn’t end as soon as you decide to make an offer. In fact, making an offer on a home can be a challenging proposition since you don’t want the figure to be either too high or too low. Going in too high can cause you to pay too much for the home and making an offer on the low end may take you out of the running. While you already know the seller’s asking price, this figure is rarely presented as an opening offer, especially in this market.
Doing some homework on the house you want to buy is essential, and it’s important that you do these things quickly and methodically to help you form a unique negotiating strategy.
A candid conversation with your real estate agent is the perfect place to start. He or she will have the best understanding of the current market conditions and be aware of all the factors regarding the house as well as what the demand for that specific house is like. Chances are the home is someone else’s dream home as well.
Questions to go over with your agent include: How long has the home been on the market? How long have the sellers owned the home? Are there any offers already on the table? When do they prefer to move? Is the house occupied or vacant? Have they already adjusted the listing or asking price?
It’s also a good idea to look at comparable sales. Are there any recent sales that compare closely to the home? Specifically, you want to compare prices of homes that are similar in square footage, number of bedrooms and bathrooms, garage space, lot size and type of construction. If the home you’re interested in is part of a tract of homes, you’ll most likely find some exact model matches to compare against each other.
With your agent by your side, look at these recent sales to come up with a price range you feel comfortable offering. Then, analyze additional data, such as the condition of the home, improvements made to the property, current market conditions and the circumstances of the seller.
When putting together your negotiating strategy, be sure to take into account that the data in real estate sales is only so useful. For example, a seller may know that the market value of their home is $400,000, but they’ll price it at $475,000, expecting someone to lowball on their offer. Or, they may feel that their house is better than all the comparables (most homeowners think their house is worth more than everyone else’s!). The seller may have raised a family in the home, bought it before they married, or cared for a deceased spouse there, so emotions often come into play when it comes to price.
Once you determine all the factors and come up with a price you feel comfortable with, make an offer. Every homebuyer, be it a first-time buyer or savvy investor, tries to figure out what that perfect number is. Determining the right price, or how much wiggle room there is, is the bottom line to making an offer the seller can’t refuse.
For more information about making an offer, contact our office today.