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How Much to Offer on a House For Sale or To Buy

There are many important decisions you must make whenever you are either selling your home or buying a home, but one of the most important is the asking price or offer. Numerous factors can affect the price at which you list your home as well as the offer you make when trying to buy a new home. Understanding those factors is essential to hitting the right target. As a home seller, if you make the mistake of listing your home's price too high, you run the risk of missing out on buyers. List it too low and prospective buyers may wonder what's wrong with it. On the other hand, if you are a home buyer, you face a similar quandary. Offer too much money and you might regret it later on. Don't offer enough and your offer might be rejected. So, how do you know how much to ask for your home for sale and how much to offer on a house to buy? The simple guidelines below will help you to navigate the murky waters of listing prices and offers.

Sellers and Listing Prices

As a seller, one of the factors that you should take into consideration is how much your home may be worth based on local comps. Your listing price should be in line with the fair market value of your home. An experienced real estate agent can assist you with determining this value by comparing your home to similar homes that have sold in the area recently. When setting a listing price for your home, do not fall into the trap of setting a price based on what you think your home should be worth. Most sellers will find that today what they think their home should be worth is drastically different from its actual fair market value. The amount you paid for your home when you originally bought it and even improvements you have made to the property since that time could be completely irrelevant to the actual value of your home in the current market.

Buyers and Offers

One of the most important aspects buyers need to take into consideration when determining how much they should offer is the amount they can afford to pay. Savvy buyers will have taken the time to be preapproved for a mortgage loan before even beginning to shop around for a home. The key to making the right offer is to ensure that any offer you make not only falls within the range for which you were preapproved, but that you also keep in mind the funds you will need in order to actually close the deal. This includes your down payment as well as closing costs.

Sellers and Buyers

Both sellers and buyers need to be concerned with the competition in the current market. Sellers need to take a long and hard look at other homes that are for sale in their neighborhood and consider whether the amount they are asking for their home is competitive with other homes for sale. The simple fact is that the more homes that are for sale in your area, especially short sales and foreclosures, the more flexible you are going to need to be in terms of pricing your home. In other words, if there is a lot of competition, you may need to price your home lower to bring in buyers.

Buyers must also be aware of the level of competition in their current market. While the market remains distressed throughout much of the country, there are actually some areas where properties are continuing to bring in multiple offers. If you happen to be buying in one of those areas, you may need to consider increasing your offer to improve your chances of seeing it accepted. Make a point to find out from your agent how many offers have been made on the home you are considering. If there haven't been many or any offers you will be in a better position to negotiate a lower price. You should also make a point of finding out how long the home has been on the market. The longer a home has been on the market, the more likely a seller typically is to accept an offer that is below the asking price. Finally, find out how motivated the seller is to actually sell by determining whether they have made any previous price reductions in the listing price. This can often be an indication of a highly motivated seller who is willing to negotiate.

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