How To Determine Offer Amount

by | May 1, 2022 | Home, home purchase, home sell, Millennial, mortgage, real estate, realtor, seller

If purchasing a home is on your itinerary, an abundance of questions are most likely dominating your mind. Above all, it can certainly become overwhelming when pondering how much money is sufficient or fair to offer. In the earlier years of real estate, it was absolutely reasonable for clients to come in at asking price or even below. Nowadays, the market has more competitive, so you might need to increase your numbers in order to have a fighting chance. Thus, an excessive amount of bidding wars are taking place. Here are a few ways to determine how much you should offer, depending on various circumstances:

 

Research

The value of a home differs from one town to another. Due to this, it’s crucial that both you and your realtor do some homework. Look up properties in the surrounding area to see how much they sold for in the recent months. Make sure that the criteria is similar to the subject property you’re interested in. By doing this, you’ll be provided with solid comparable homes that’ll aid in determining how much the property is truly worth. 

 

Obtain a Pre-Approval

Before you begin your home search, it is highly advised that you consult with a mortgage lender. A pre-approval essentially indicates how much funds you’re permitted to borrow from the bank. With that being said, you’ll be provided with a maximum number that you can submit an offer for. Having this piece of information sets limits and realistic expectations because your budget will be more concise and you’ll know how much you can afford. 

Consider Using Cash 

If you have the opportunity to use cash rather than finance, that’s certainly your golden ticket! A cash offer is automatically favored and placed on a higher pedestal. They are less risky, providing more reassurance to the seller. Upfront cash indicates that necessary money is situated, helping to lessen the chance of drastic issues down the road. If this is the route that you will be taking, it may help you avoid paying over asking prices altogether due to the importance of a smooth transaction.