You’ve been searching for months on end for the perfect home and you’ve finally found it. Congrats! Now it’s time to make an offer, but what exactly is a fair offer? With the housing inventory finally bouncing back from an all-time low in the season that’s typically a buyers market, buyers still sometimes have to compete with other individuals for the home of their dreams with the hopes that the seller will accept your offer. Losing this house is out of the question but making an offer that is fair to both you and the seller can be tricky.
If you’re questioning whether your offer is fair, consider the following:
What are the Current Market Conditions and Inventory?
Understanding the current market conditions and inventory will give you a better idea of what a fair offer is. Look and see if there are similar houses for sale and how long they’ve been on the market. If there are several houses for sale that stay on the market for an average of at least a month, you are in a buyers’ market.
If you notice a lot of homes that are for sale in the area you are looking are going into contract within the first few weeks they are on the market, the market is a sellers’ market and you may have to pay a little more.
How Long has a Home Been on the Market?
Once you’ve done your research on the current housing market, you’ll want to focus in on how long a property has been for sale.
In a buyers’ market, you’ll be in a better position to negotiate. Your agent may advise you to start with an offer below asking price. In a sellers’ market, you may want to make an offer of at least the asking price, if not more. In these situations, a realtor is the greatest resource in order to get first looks at home right when they hit the market (or even before!).
Experienced Realtors know how to navigate a buyer’s and a seller’s market and negotiate a strong enough offer that sometimes you don’t have to pay more to beat out other buyers. Having a buyer’s agent representing you is essential in this process!
What is the Competition Like for this Home?
In a booming real estate market, there tends to be several offers for homes and you may be up against not only other homebuyers but real estate investors. In both situations, all-cash offers are likely, which tend to be deal breakers for a lot of sellers. In this case, an escalation clause in your offer can be beneficial. You can be competitive against all-cash offers if you will be purchasing the home with a loan- make sure your agent discusses with you how!
What the Seller is Looking at When Reviewing Offers
Whether the seller is reviewing one offer or multiple offers, there are several points they are looking at. These include:
- Is the offer an all-cash offer?
- Has the buyer been pre-qualified or pre-approved for a loan?
- If they’re selling a family home, are any of the offers from families that are hoping to raise their children here?
- What are the buyer’s offer contingencies?
- What does the timeline look like for closing dates?
When making an offer, you will never know what a seller will and will not accept. Always submit an offer that you’re comfortable with and what you think is fair. It’s always helpful to submit a letter to the sellers explaining to them why you love their home- connecting with them on an emotional level can ease the seller’s nostalgia about moving by letting them know you’ll love and care for the home that they’ve loved and cared for!
Let the Lamacchia Realty team help you find your dream home and walk you through the process of making an offer!