Finding a home that you want to move into is just the beginning of the home buying process. The step immediately after you find the home that you want to purchase is placing a bid on that home. But when making a bid, there’s a fine line between offering a reasonable price that you’re happy with and insulting the seller with a lowball offer. When it’s time for you to bid on a home, here are some strategic tips to remember.
1. Know the seller’s motivation to sell. Knowing how motivated the seller is can help you reach a fair bid that will be amicable for both you and the seller. Find out why they put it on the market and how much equity they have in the home. Also, knowing how long it’s been on the market will help you decide how much to offer in your bid. If it’s been on the market for awhile, they may be more motivated to sell it so they don’t have to make any more mortgage payments than necessary.
2. Talk to the neighbors. Placing a bid on a home should involve an evaluation of more than just the structure. It should also include a consideration of the surroundings. Does the neighborhood have a high crime rate? Are there any major construction projects planned in the near future? How are the schools in the area? If you can find some facts that seem less desirable, you can offer a lower bid based on what the neighbors tell you about the area.
3. Get your agent’s advice. Having a real estate agent working on your side is one of the best things you can do when buying a house. Before you making a bid, you should ask their advice on a reasonable offer that is fair and won’t insult the seller. A buyer’s agent has the skills and the resources to find prices of comparable homes in the area. They also have better negotiation skills for getting a better price for you.
4. Know the market. Before placing your bid, do some research about the real estate market overall. Is this a buyer’s market or a seller’s market? If it’s a seller’s market, the homeowner will be less likely to take low offers because they know there will be another buyer around the corner.
5. Include contingencies with your bid. It’s common for a potential home buyer to place a bid on a home based on contingencies. This means that there are clauses in the buying contract that give the buyer a legal way out if there are major problems with the home. It’s common to include contingencies that state that problems must be fixed in order for the bid price to be valid. Many times, the bid amount is contingent on the outcome of the home inspection or the buyer qualifying for a mortgage, but the offer can include other contingencies as well.
Placing a bid on a home shouldn’t be approached lightly. There should be careful thought and consideration in the amount that you bid so you and the seller can reach a price that can make everybody happy.