Friday, October 12, 2012

Making An Offer: The Basics

The process of making an offer on real estate can vary according to market trends. Until recently, home buyers could bid a little low and still hope to get the home they wanted because of the deflated market. However, now that the real estate market is picking up, and median home prices are beginning to increase, making an offer might be a little more complex. When it comes down to it, there are four basic scenarios you may encounter when you're ready to make an offer on your new home: low offers, high offers, full-price offers, and full out bidding wars. 

The 4 Basic Real Estate Offer Scenarios

  1. Making a Low Offer. This occurs when the real estate market is flooded with houses and there's a buyer drought. There are also cases where "For-Sale-By-Owner" homes, or clients who don't heed their agent's advice, ask more than a house is worth on the current market. Either way, if you come across a home you like, have a feeling the sellers haven't had many bites, feel the house is overpriced, or sense the sellers are just plain desperate, making a low offer can be a great way to save some money.
  2. Full Price Offers. If you aren't the bartering type, really love a home, and feel that the asking price is worth it, then it's usually best to make a full price offer. Here's the thing; just because people are selling their home, doesn't mean they don't love it. Sometimes, buyers' efforts to "save a buck" can be insulting to the sellers. Why make a low offer when you feel you have found what you are look for and can afford to honor the sellers legitimate price?
  3. Making a High Offer. This one is trickier to navigate. Sometimes, buyers make a higher offer because they do not want to go back and forth with the sellers, they really like the property, and they sense others are making full price offers. It can also occur when sellers get antsy and request a buyer's "best offer." Either way, as a buyer you need to be 100% positive that this is the home you want and that the price you offer is a price you are willing - and qualified - to pay.
  4. Bidding Wars. Ugh. This describes the real estate market in the early-2000s. You have to really want a home, and be willing to take the risk of paying an inflated price, to engage in a bidding war. It can be ugly, stressful, and you might end up with an upside-down-mortgage in the future if you aren't careful. Sometimes, the wisest course of action is to wait out the war and see what happens. The seller might come calling when the other bidders all throw their hands up in frustration.
To save yourself the risk of over offering, have a very clear commitment of what you are willing to pay, and the offer scenarios you are willing to get into, before you start looking for that dream home. When you think you're ready, make sure you give us a chance to help either at Pacific Place or with a real estate agent from Sequoia Realty Services.

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