As Realtors, when we are representing a buyer, it is extremely likely that we will be asked to advise on what price they should offer on a house they want to buy. While we work hard to advise our clients the best we can, there is no scientific equation that will tell us what the perfect price to offer on a given property is. In many cases buyers can negotiate a sale price on a property that is below list price… HOWEVER, as we are sure you have heard, the market is currently a SELLER’S MARKET and that changes the way you will want to approach making an offer on a piece of real estate!
First let’s talk about what a “Seller’s Market” is. In short, this means that there are a lot of buyers looking for houses but very few people selling houses. Low inventory, high demand. This results in high prices and aggressive competition. Many sellers will find themselves in a bidding war with multiple offers on the table.
So how do you decide what you should offer?!
The number one thing to consider when deciding what price to offer is how much you can AFFORD to offer. Before you get lost in how to win the bidding war or speculating what bottom dollar price the seller has in mind, you need to know what you can afford and what price you would feel comfortable offering for a particular piece of property. I recommend meeting with your mortgage broker and talking about pre-approval BEFORE you start looking at houses!
Check back next week for our #2 tip on making a competitive offer!