It has been a long process of researching ideal areas, browsing listings and visiting countless potential homes. Now you have found the perfect home and you’re ready to put in an offer. Where do you start? What do you do? In this article, we will provide you with the basics on bidding on a house, with the goal of getting you in the home you want at a fair and reasonable price.
Determining the Bid
There are many factors that come into play when determining an appropriate bid on a home. One of the first things to consider is the current market. If it’s a seller’s market, putting in a bid that’s less than the asking price may not be favorably received. If there’s fewer inventories than buyers, you’re at a disadvantage, and chances are the seller is going to receive multiple offers.
In a buyer’s market, it’s more likely that the seller will entertain an offer below the asking price. Another important factor to consider is the “comps” – comparable sales that have been made in the same neighborhood. If the home you’re interested in is comparable to the home next door that just sold last week, it’s important to see what that house sold. In addition, others in the area within the last six months.
An experienced agent can provide additional details that will help you in determining an appropriate bid. They can bring you up to speed on what the seller’s current situation is. Assessing whether or not the seller is in a desperate situation can help determine what their willingness may or may not be to sell it quickly at a competitive price.
It’s important to consider potential contingencies prior to submitting your bid on a home. Contingencies are designed to help protect buyers. For example, you can create a list of conditions that are required to be fulfilled prior to considering the deal final. You’ll want to ensure a home inspection is conducted as well as an appraisal to ensure the home is in proper condition and also worth the value of your bid. However, avoid unnecessary contingencies, as they can make your offer less appealing.
Making the Bid Attractive
There are many factors that make bids attractive to sellers. If you can include a copy of a pre-approval letter with your offer, it will hold more weight than an offer that includes a pre-qualified letter. A significant down payment also helps, as well as providing documentation that shows the source of your down payment.
Handling Multiple Bids
If it’s a seller’s market and the seller is entertaining multiple bids, it can make for a very frustrating experience for potential buyers. If your bid is not accepted, the seller and their agent do not have any obligation to give you information on the decision. Work with your agent to determine how aggressive you should be in your initial offer to increase the chances of getting the property, especially if you really want it.