After weeks of looking at home listings and viewing houses with your agent, you’ve finally found one you want to make an offer on. But you’re not quite sure what a good offer is. You don’t want to offer too much money, and you don’t want to make an offer that’s so low the seller takes one look at it and runs the other direction.
The “What’s a good offer?” conundrum affects sellers, too. You don’t want to turn down an offer that might be the highest you’ll get, nor do you want to accept an offer that’s nowhere near what your home is worth. Luckily, there are a few ways for you to know if the offer you’re getting or making is a decent one.
Make a Comparison
One of the most useful tools for a buyer or a seller is a comparative market analysis (CMA). Put together by a real estate agent, a CMA gives you a snapshot of similar homes that are either currently on the market or that have recently sold. It’s important to compare like with like when looking at CMA. For example, if the home you’re thinking of buying is a two-bedroom, one-bathroom row home in the Whitman neighborhood of South Philadelphia, you want to look at home listings for other properties of the same size in the same neighborhood. Usually, a CMA will list homes within about a mile of the property you’re considering.
When deciding what type of offer to make or accept on a home, look at the sales prices on the CMA, not just the listing price. You might see a range of sale prices on the CMA, depending on how far back it goes and the condition of each home. For example, a home that sold two years ago might have a substantially different price than one that sold a week ago. Find the average price for the homes you’re comparing to get a general ballpark figure for the amount you should offer or the type of offer you can expect.
Look at the Condition of the House
The current condition of the house you’re looking at also plays a part in determining what a good offer is. You can expect to make an offer that’s in line with the average sale price for the area on a home that’s in decent shape. You can probably go quite a bit lower with your offer if the home is visibly run-down. You might also be able to make a lower offer on the home and still have it accepted by the seller if the home is in a less-than-desirable location, such as a flood-prone area or right underneath a commuter rail line.
Think of the Market
The real estate market in Philadelphia also determines what a good offer on a home is. If homes are sitting on the market for months at a time, you might be able to put in an offer that’s a lot lower than the asking price and have it accepted or at least have the seller come back with a counteroffer. In times when houses are selling quickly and there are more buyers than sellers, you might want to up your offer, so that a seller is more likely to take it.
Most importantly, a good offer on a home should be an amount you can afford and an amount that’s in line with the home’s value. Keep your offer realistic based on statistics and facts, and you’ll find yourself moving into a new home in no time.
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