- Know Your Market
If you have a particular area in mind, you should become an expert on what properties in that area are going for. Your real estate agent can help with this but by having a knowledge of home values yourself, you can give yourself an edge. It keeps you from being at the mercy of your agent. Study what the asking prices are in the area and ask your realtor to share with you what the homes actually sold for. Review comps often to stay current on the trend.
- Understand Your Seller
There are three different strategies used by sellers and you should understand them all. First, you have the seller who is listing a home high. They know that they can not get the price listed but want to have room to haggle. The next type is the person who lists it at fair market value. They are looking for a quick sale with little back and forth. Finally, you have the seller who lists under market. This is a strategy used to attract a lot of buyers and hopefully instigate a bidding war. Knowing fair market values will allow you to recognize what kind of seller that you have.
- Make Low Offers Correctly
If you are looking for a deal, you have your work cut out for you. Be prepared for a lot of back and forth negotiations and find a way to prove that your offer is fair. Compare the home to others that sold but point out the deficiencies on the one you are bidding on. Deficiencies that you feel should drive down the price. The trick is to point these things out without offending the owner who might have a personal attachment to the home. Also, you should have all of your t’s crossed and i’s dotted. Your mortgage should have more than just a loan quote, you should be pre-approved and you must be ready to proceed at the speed the owner wants.
- Get The Sellers Purchase Price
Your real estate information can get you this information and you can also estimate it using the counties appraisal district website. They will list the date the home changed ownership and the county will adjust the price up the next year to a price that will often match the sellers purchase price. Use this information to determine a fair appreciation schedule so that you can determine a fair price to offer. It also helps you see how much the owner will profit from the transaction, a good thing to know.
- Bid According To Conditions
If it is a sellers market then there will be more buyers than homes. For best chances of getting a house, you will need to bid much closer to list price. If it is a buyers market and there are more sellers than buyers, you might be able to lowball and get a deal. If you are interested in shopping during a buyers market, you are more likely to encounter one during the winter. The drawback to that though is that there will be fewer homes available to chose from.
- Know Your Home Features
There are many factors that can hurt or help a house. One of the biggest is school districts. A good district can dramatically boost a home price will a poor one can do just the opposite. Another factor to consider is home layout. An unusual layout might detract from a homes value, lowering the price per square foot. A sought after layout, such as a large 1 story home, can raise the price per foot.
- Don’t Insult Your Seller
A bid far below list price is very unlikely to result in an accepted offer. What it can do however is irritate your seller. Insult them with the first offer and they are far less likely to negotiate with you on future offers. If you intend to offer below list, make it reasonable.
- Find The Sold Versus List Price Ratio
With the help of your real estate agent, look at how much listings sold for versus the price they were listed at. You can then see what percentage people are coming down, on average. This can help you come up with a fair offer.
- See If Your Home Was Re-Listed
Your real estate agent can find out if your home was listed recently and pulled off the market. Look at the old price versus the new one. This information can help you get into the head of your seller. For example, if the listing expired months ago and then re-listed at the same price or higher price, you have a seller who is willing to wait it out. If the price is cut, you might have a motivated seller on your hands.
- Don’t Underestimate Emotions
Many home sellers are very attached to their homes. They have lived in them for years and have put blood, sweat and tears into them. A letter with your offer explaining your situation might help you get a bidding edge. You can talk about the family that you have or plan to start and your intentions to live in the home for years. All else being equal, an attached seller would rather sell their home to a family than an investor who wants to rent it out.
- Stay In Your Price Range
Trying to move out of your price range by making low offers is vey unlikely to work. A lowball offer at the max of what you are approved for leaves no room for negotiations. You would simply be wasting your time and that of the seller.
Placing Your Home Bid
Placing a bid on a home is stressful. You don’t want to pay too much but you also don’t want to lose the home you are bidding on. You need to come up with a bid that you think the home owner will accept and that you can live with. If you are getting ready to start the bidding process on a home, read these tips.