Helpful Mortgage And Real Estate Advice

How Do I Determine The Initial Offer?

By on January 15, 2014 in Mortgage Videos

Each real estate transaction is unique, allowing both sellers and buyers to negotiate over pricing, appliances and even closing costs. Your initial offer is often the starting point for final negotiations. You want this offer to be fair for both parties, depending on the property and seller’s situation.


Communication Is Key

For most homebuyers, you will be speaking primarily with the seller’s agent. Be aware that your conversations may be repeated to the sellers unless you ask the agent to keep the information confidential. It is a smart idea to bring a buyer’s agent, or realtor, along with you to help with property questions. They can offer an opinion about your initial offer price, but in the end, it is your final decision. You do not want to let the sellers know what price you are contemplating, however, until you are ready to reveal your intentions.

Consider Your Financial Situation

If either agent is suggesting a higher price than you feel comfortable with, it may be time to find another property. You must consider your financial situation when evaluating potential offers to the seller. If the sellers want $300,000, but you are topped out at $200,000, the difference may be too great to negotiate a deal.

Factors To Consider In Offer

Take a look at the local real estate values in your area. Property values vary greatly from month to month. Be realistic about your offer when comparing it to surrounding properties. If the home needs substantial work, or has been on the market for many months, the property may have an underlying issue that you need to consider. A home inspection may reveal structural issues, requiring thousands of dollars of repairs, for example. A home in foreclosure may make the seller more motivated to discount the price as well. Take all these factors into consideration when forming the initial offer.

The Negotiations

Once you place your offer on the table, the sellers typically counter with another amount. This negotiation process is natural in real estate. Counter the amount with a price that is fair to you. At some point, you and the seller may come to an agreement, allowing the property to be transferred promptly.

Evaluate the property, loan terms and special considerations when negotiating over an initial offer. You may be the only buyer or part of a group. Regardless of the situation, you want the sale to be fair and comfortable for your financial situation. A home is a major investment you enjoy for decades.

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About the Author

About the Author: Jessica Lucas is the managing editor for Mortgage Home Base, a top real estate finance blog dedicated to helping borrowers and home buyers understand the home loan process. Follow Jessica on Google +, and share your comments here. .
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