Things to consider before making an offer on a home
- Research the market in the area you’re looking to purchase in to determine the true value of the home you’re considering
- Being pre-approved for a mortgage, not just pre-qualified, is an excellent way to show the seller that you’re serious and will save everyone time if your offer is accepted
- Don’t hesitate to get a second opinion on prospective homes from friends and family
- See if self-representation (and the huge savings that come with it) could be for you
Making an offer on a home is a big decision. Here are some things to consider and tasks to complete (such as determining an appropriate offer price) before taking that next step.
1) Research the market
Be sure to research the market in your desired area. In a buyer’s market, fewer buyers result in higher discounts. In a seller’s market, where homes sell quickly, you have less power as a buyer. Which of these two does your local market resemble? Figuring this out will help you act more strategically.
Researching the market also involves obtaining data on recently sold homes in your area that are comparable to the one you’re trying to purchase. These homes, called comparables, are good signals of the true value of your prospective home. It may also be a good idea to check out these homes in person. Comparables can also be used to justify your offer if it doesn’t exactly line up with the seller’s expectations.
You should also inspect the home you’re looking to buy and explore the neighborhood. Pretend that you live there. You should do things you do on an everyday basis and evaluate if your new home might inconvenience you in any way. Prioritize your needs to decide if you’ve found the right home for you.
2) Think like the seller
Introducing yourself in a letter to the seller is a good idea. The seller will have a better idea of who you are and why you want to buy their home.
Know that low-balling can be risky. If the seller feels insulted by your offer, you may lose your chance to negotiate. On the other hand, some sellers ask for an overly exorbitant amount knowing that negotiation will likely bring the price down. It’s a judgment call on your end.
3) Get a mortgage pre-approval
A mortgage pre-approval requires completing a mortgage application and providing your lender with all appropriate income documentation and personal records. A mortgage pre-approval signals your seriousness to the seller. Think of it this way: if a seller is presented with two identical offers from two different parties, the only difference being that one party is pre-approved and the other is just pre-qualified, the pre-approved offer is most likely to be taken seriously. A mortgage pre-approval will also significantly speed up the process of closing on a home once your offer is actually accepted.
4) Get a second opinion
Buying a home is an important decision. Never hesitate to seek out a second opinion or a different viewpoint on your ideas. A trusted friend or family member, perhaps one that has gone through the home buying process before, might be of great help to you. When you’re ready, learn more about making an offer that gets accepted.
See if self-representation is for you!
Did you know that, according to a National Association of Realtors survey, 51% of homebuyers under the age of 50 find the home they actually end up buying online by themselves? Let's be real, in today's age you already complete so much of the home buying process without an agent (look for homes, talk to lenders, sort out your finances, etc.). But when it comes time to make an offer, you're stuck reverting to the way things used to be done in the past. Now there's Home Savi: the modern way to buy a home.
With Home Savi, you can create your own offers, negotiate and close without a buyer's agent and save the 2.5–3% commission that would have gone to them at the same time. On a $750,000 home, that's a savings of around $18,000—enough to pay for closing costs, a remodeling project or even a vacation.
And the best part is that you can try it out for free just by signing up. Give it a shot and unleash the real estate pro that's within you today!
Photo credit: Chris Lott