Whether you’re a first time buyer or you’ve been through the home buying process several times, there’s one critical question that always comes up when you finally walk into a home that immediately has you planning your first dinner party and future holiday get togethers – how much do I offer? Of course, market conditions and financing are primary considerations here, so the answer can vary quite a bit, but there are certain things you should always take into consideration.
First – location, location, location. Is the home in a desirable neighborhood with a solid reputation and good school systems? Are you seeing many other, similar homes are on the market in the area? In suburban, family-oriented neighborhoods with good schools, people tend to stay put for some time, meaning there’s likely to be less inventory. Ask your real estate agent to pull information about the sales of nearby homes (comps), and if the price per square foot is in line with the asking price of the home you’re considering, your offer should fall somewhere around asking price (especially with the current market conditions in and around Boston).
Second – How much work does the home need? Some people love to throw themselves into home renovations. Whether it’s painting, tiling, adding space or taking down walls, some buyers will see nothing but opportunity, while others will be turned off instantly. Generally speaking, the more work a home needs (especially structural) the smaller the pool of interested buyers. This doesn’t mean that you can take an estimated cost of renovations and subtract it from the asking price, however, as the seller has likely already been advised by their agent to factor repairs into the asking price, it just means that you’ll likely have less competition, and therefore more flexibility with your offer.
Third – How long has the home been on the market? Current real estate conditions in and around Boston right now have very few homes sitting on the market for long periods of time, so if you look at a home that has been on for longer than 30 days, you have to wonder why. Everybody values different things about a home, so what turned other buyers off might not be an issue for you, but make sure that the long market time isn’t a result of a bad inspection, causing a pending sale to fall through, or another condition like high crime in the area. While you shouldn’t necessarily exclude a home that’s been on the market for several months from consideration, due diligence is key. If the home meets all of your criteria and you’ve done your research, you can factor the length of time on market into your offer.
Fourth – Have there been price reductions since the home was listed? While you might think price reductions indicate a desperate seller (and sometimes they do), a home is more likely to sell right after the price is reduced since it will suddenly meet the criteria of a whole new pool of buyers, so if you’re interested in a home that has just fallen in price, expect that there are others who are as well. (Example: if a buyer sets their maximum search price for $499,000, they won’t see any homes listed for $500,000, but if the price falls just to $498,000, suddenly it will show up in searches and a pool of new buyers will be eager to see it). That being said, if the price has been reduced several times, likely the seller is motivated, possibly because they already have another mortgage, and will consider lower offers.
The home buying process is an emotional one and it’s difficult for buyers to think of such an important decision as a business transaction, so it’s critical to have an agent that you trust, who can help you weigh the factors and determine the right offer price. Remember, they’re experts when it comes to the local housing market, and though you should always do your own research, a savvy agent will make sure that you’re paying the exact price that you should for the home of your dreams. For more tips from our expert team, visit us at www.thecharlesrealty.com.