The Secrets To Making A Smart Offer
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One of the hardest decisions a buyer faces is how much to offer on a home. You desperately want your offer to be successful, but are equally terrified of paying too much for it. With the glut of information on the internet, buyers can get bogged down with percentages and complicated sums to determine a price, only to miss out on the day and be left wondering what went wrong.
Here a shortist list I made of how to make a smart offer -
Check comparable sales
Have a good look at comparable sales in the area, and think about how they compare to the property you are looking at. You should be able to get these from various websites and hopefully the selling agent as well. (or give me a call – I’ll happily supply sales even if I am not selling the house you want) Ideally, look for those that are recent sales (3 months or less), very similar properties i.e same number of bedrooms, bathrooms, size of property and land; and / or similar style, condition and amenities. It can also be helpful to look at sales from other nearby suburbs that are similar to the suburb you have chosen to give you a broader view.
Know how much you can afford
Talk to your bank and know your budget. It’s vital to make sure that your offer price for any given home falls within the range of what is affordable for you. This includes offering a price within the range for which your mortgage was preapproved, but also includes making sure that the monthly payment and cash you’ll need are affordable in light of the particular house. If, for example, the property will require repairs, maintenance or signifigant upgrades, for which you’ll need to conserve cash, you may need to alter your offer accordingly.
What is your competition
Go to all the open homes and see how many people are showing the signs of making an offer. Also ask the agent – they may give you an idea. It is always best though to assume that you will be in competition, because even if you are the first to make an offer, an agent is obliged to see who else would also like to offer before this is presented to the vendor. If you are in competition, you many not have a chance to negotiate, so you will need to put your best offer forward at the beginning. Holding back funds to negotiate later may lose you the chance altogether.
What more can you find out – ask questions
Ask lots of questions. Is there a price range being quoted and how does that compare to other sales in the area? Has it been on the market for long time and has there been price drop. What is the reason for the property being sold – this will give you an indication of how motivated the owner is to sell. Also ask about disclosures and if the are any issues with the property, land or surrounding area. The more you know, the more you can factor into your offer.
How much do you want it
If you are an investor, you will be looking at a property with a different view point than if you have finally found the home of your dreams. And there is a school of thought that you shouldn’t offer a price way above what the place is worth just because you really, really want it - unless you have the cash to throw around. But within the range of the home’s fair market value and compared with other sales in the area, it makes sense to move higher within that range if you are highly motivated to get that particular property. Particularly if you intend on living in the property for a good amount of time – a little extra now to secure the property will be worth it in a few years time.
Know your ‘walk away’ price
Taking all of the above into account – this is the most important factor. You may have been looking for a long time, missed out on a few places or just know that you finally you have found the perfect home. You know you will be there for a long time and feel its ok to pay a little more because its perfect. With this in mind, think – what is my ‘walk away price’ - any higher that that and you would be happy to walk away and pay no more. Sometimes this is what will win you the home of your dreams – and it will be worth it.
If you still can’t decide - give me a call - I’m always happy to help!!