Making an Offer on a Home - Nine Factors That Affect Price and Terms
There comes a time in any home buying process when you'll want to make an offer on a home.
Consider the following factors and how they may affect your offer's final terms and price.
Location of Home: Location is usually the most important factor when it comes to pricing a home.
An identical property with the same number of bedrooms and baths may be priced very differently from another property based on the location of the homes.
A very popular area can often increase the price of a home many times over compared to a less popular area.
Market Conditions: You'll want to err on the side of being a bit more aggressive with your offer if there are many buyers in the marketplace and relatively few homes for sale.
This may mean a higher bid price, terms more favorable to the seller or both.
If you find yourself in a slower market, you'll likely have the luxury of bidding a lower price or asking for concessions or credits from the seller.
Physical Condition of the Home: Is the home a foreclosure that was ransacked by prior tenants? Has the home been well-kept by one owner for over 30 years? Good physical status is certainly preferable, while an inferior physical condition of a home may indicate the need for additional repairs in both the short term and long term.
Size of Home: You probably expect that a much larger home will typically sell for more than a smaller home.
Two properties that both offer 3,000 square feet of living space may package that space in very different ways.
For example, one property may have two large modern baths while another house has two baths that are smaller and outdated.
While a property with more rooms is often more valuable, numerous smaller rooms that don't meet a buyer's specific needs may have the opposite effect.
Style of Home: Typically, a geographical area will have many different styles of homes available.
Does your area have thousands of row homes but few freestanding structures? Is one style more popular than the other? Adjust your bid accordingly.
Quality of Construction: Has the home stood the test of long periods of time? Was the home built with inferior or unsafe construction materials? Quality of construction and quality of materials may have an effect on your bid price, particularly if you expect to be making more repairs than on comparable properties.
Safety can also be an issue with materials such as lead paint.
Amenities: Amenities such as pools, patios, decks and parking will also have an effect on your offer price.
You'll want to include the value of these amenities in any offer, but also consider the additional maintenance problems of these extras.
Seller Status: Sellers have different needs.
Some sellers aren't in a rush to sell their home and will make no particular efforts to work with a buyer.
Other sellers may be very motivated to sell their home due to a pressing personal issue.
As a rule, you'll find that a motivated seller tends to be more willing to negotiate on price and terms.
Alternatively, you can expect few concessions from sellers that are simply testing the market.
Days, Months or Years on Market: Sellers tend to be more motivated to consider lower offers from buyers if it is taking a long time to sell their home.
On the other hand, many sellers have strong convictions about their home's market price and may be unwilling to budge on price, even if the market seems to suggest a change in pricing strategy.
Applying the facts of your particular situation to the factors above will help you reach your goal of submitting a fair and competitive bid for the home of your dreams.
Consider the following factors and how they may affect your offer's final terms and price.
Location of Home: Location is usually the most important factor when it comes to pricing a home.
An identical property with the same number of bedrooms and baths may be priced very differently from another property based on the location of the homes.
A very popular area can often increase the price of a home many times over compared to a less popular area.
Market Conditions: You'll want to err on the side of being a bit more aggressive with your offer if there are many buyers in the marketplace and relatively few homes for sale.
This may mean a higher bid price, terms more favorable to the seller or both.
If you find yourself in a slower market, you'll likely have the luxury of bidding a lower price or asking for concessions or credits from the seller.
Physical Condition of the Home: Is the home a foreclosure that was ransacked by prior tenants? Has the home been well-kept by one owner for over 30 years? Good physical status is certainly preferable, while an inferior physical condition of a home may indicate the need for additional repairs in both the short term and long term.
Size of Home: You probably expect that a much larger home will typically sell for more than a smaller home.
Two properties that both offer 3,000 square feet of living space may package that space in very different ways.
For example, one property may have two large modern baths while another house has two baths that are smaller and outdated.
While a property with more rooms is often more valuable, numerous smaller rooms that don't meet a buyer's specific needs may have the opposite effect.
Style of Home: Typically, a geographical area will have many different styles of homes available.
Does your area have thousands of row homes but few freestanding structures? Is one style more popular than the other? Adjust your bid accordingly.
Quality of Construction: Has the home stood the test of long periods of time? Was the home built with inferior or unsafe construction materials? Quality of construction and quality of materials may have an effect on your bid price, particularly if you expect to be making more repairs than on comparable properties.
Safety can also be an issue with materials such as lead paint.
Amenities: Amenities such as pools, patios, decks and parking will also have an effect on your offer price.
You'll want to include the value of these amenities in any offer, but also consider the additional maintenance problems of these extras.
Seller Status: Sellers have different needs.
Some sellers aren't in a rush to sell their home and will make no particular efforts to work with a buyer.
Other sellers may be very motivated to sell their home due to a pressing personal issue.
As a rule, you'll find that a motivated seller tends to be more willing to negotiate on price and terms.
Alternatively, you can expect few concessions from sellers that are simply testing the market.
Days, Months or Years on Market: Sellers tend to be more motivated to consider lower offers from buyers if it is taking a long time to sell their home.
On the other hand, many sellers have strong convictions about their home's market price and may be unwilling to budge on price, even if the market seems to suggest a change in pricing strategy.
Applying the facts of your particular situation to the factors above will help you reach your goal of submitting a fair and competitive bid for the home of your dreams.
Source...