Welcome back, Mythbusters!
After searching through countless properties online and seeing a few in person or over video, you’ve found a home you love. Now it’s time to put in an offer. This is often where things become very real for buyers — you have envisioned yourself living in the home, and experienced the excitement that comes with it, yet you also want to make a smart financial decision.
While our goal is to help you buy the best house at the best possible price, we often see buyers (and sellers) agonizing over a gap in price that might not be as big as they imagine. Let’s get to the myth:
The Myth: “You should always make a low offer.”
Let’s start with the facts. When preparing an offer, your Realtor will run a comparative market analysis to see what similar homes in the area are selling for. This will give you an understanding of what the market value is, and provide insight into whether the seller has priced the home to sell, or may have unrealistic expectations for what their home is worth.
The other important fact to consider when making an offer is whether or not there are multiple offers on the property. Supply and demand drive the market, and if there is a lot of demand for a particular property, coming in with a low offer will significantly reduce your chances of winning over the competition.
If you and the seller are close on price, it becomes time to ask yourself if the gap in price is worth losing the home. When spread over a mortgage, what seems like a large sum of money can turn out to be marginal in terms of daily or monthly costs. This is where it’s crucial to define what “winning” looks like to you. Sometimes the win is as simple as getting the home you love, and there’s no shame in it!
Finally, when making your offer, recognize the offer price is just a step in determining the final cost of buying the home. If you come in with a low offer, you may lose leverage in terms of negotiating repairs or closing costs. Your Realtor will be key in recognizing opportunities to create leverage while coming to an agreed price that everyone feels good about.
Know that every home and real estate transaction is unique, and your Realtor will be there to advise and inform you every step of the way.
More mythbusting to come!
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