Writing An Offer On A Home

When a buyer is preparing to write an offer on a home, the seller's asking price is already known.  How much should a buyer offer?  And, how should a buyer determine how much to offer?

The first step, is to look at recent sales of homes in the neighborhood.  Compare the prices of homes that are similar in bedrooms, bathrooms, size, age, construction, and lot size.  Basically, find a home that has recently sold that closely matches the home for sale.

 Next, analyze the home's condition.  Structural conditions are most important -walls, floors, windows, doors, ceilings, and roof.  Then consider the cosmetics - carpet, paint, and floor coverings.  Check the water pressure and how the sinks and tubs drain.  Is there copper plumbing?  Make sure that doors and cabinets close properly. 

Have improvements been made?  Have they been permitted?  Major improvements should be taken into account. Granite counter tops are always a plus.  Room additions, especially bedrooms and bathrooms, add a lot of value.  Swimming pools and expensive flooring should be taken into account also.

 What are the circumstances of the sellers?  A seller's motivation can affect the price of a home.  For example, if the sellers have already bought their next home, or are relocating to a new area, then they are very motivated.  They may want to sell the home quickly to avoid having two mortgage payments.  Sometimes people going through a divorce want to sell quickly also.  So, there are times when a seller is truly distressed and is willing to make a fast sale and will accept thousands of dollars less than market value. 

Have the market conditions changed?  If homes are staying on the market longer, and there are many homes available, it may be a good opportunity to pick up a bargain.

The information from comparable home sales help to determine a price range for a home for sale.  Factoring in the variables such as property condition, market conditions, improvements, and seller motivation help determine where in that range the home can be purchased for.

Real estate agents can counsel and advise, but the buyer's offers to begin negotiations is totally up to the buyer.  Most buyers offer less than the price they eventually will pay.  Yet, they should also know in advance approximately how much they are willing to pay at the end of negotiating with the seller.