If only purchasing a home were as easy as taking a trip to the grocery store, finding the best quality product for a good price, and checking out. Sadly, very little is that straightforward, especially when it comes to house-hunting.
When a home is for sale, the advertised price, or “list” price, doesn’t necessarily mean how much the buyer will pay. Interested parties can offer less, the same, or more than what the seller is asking, with varying levels of success depending on several things — including the current market.
So how do you know what to offer on a house you’re looking to buy? Here’s what to think about.
Consider the Market
Are you looking to purchase a home in a hot market like Seattle?
In a hot, seller’s market — meaning demand heavily outweighs supply — offering the price that is listed might not cut it. These homes could be getting multiple bids frequently, and homebuyers are in constant competition with each other over a minimal number of for-sale homes.
[Related: How to Buy Off-Market Homes]
Look at Comps
Talk with your real estate agent about comparable houses (referred to as “comps”) in the area. See what price these properties have sold for recently and if the home in question is similarly priced. If not, look at the home to see why it may be under or overpriced.
Does the house need a lot of work? Is it located next to a noisy (or smelly) business? This could be why a seemingly great-looking house is underpriced compared to other comparable properties.
Some sellers even list a home’s price too low intentionally as a tactic to get more attention, which could lead to the home’s closing cost increasing to a more average (or above average) price.
Is there something unique about the property, like an in-ground pool, a beautiful garden, or a mother-in-law unit in the backyard? Maybe the property is located right across from a school or on a main bus line. This could answer for properties being higher-priced compared to similar houses in the area.
[Related: Simple Home Improvements You Can Do While Sheltering in Place]
When Should You Offer Low?
If the house you’re looking at is in a location with a slow buyer’s market, meaning the supply is outweighing the demand, you can get away with offering below asking price. The property seller might not be getting a lot of leads, and an offer a bit below asking price could sound better than leaving the house on the market — especially if it has been listed a long time.
Just make sure you don’t offer so low that you insult the seller. Realtor.com suggests never to offer more than 25% under the advertised price.
When Should You Offer List Price?
If you know the home doesn’t have many bids and you feel like you can stand out in other ways (for instance, being flexible on contingencies, offering an earnest money deposit, or writing a convincing letter to the seller), you can always offer the list price as it is.
[Related: Guide for Renters Curious About Owning in Seattle]
When Should You Offer High?
In a bustling real estate market where the competition for homebuying is fierce, offering above the listed price can help you stand out among other potential buyers. You might also offer high if you or your realtor has evaluated other comps and realized that the property is underpriced.
Offering $1,000 to $3,000 more than the asking price will only minimally change your monthly mortgage payments, but could majorly help you show the seller you are serious and secure your dream home.
[Related: Can I Afford to Buy a Home in Seattle?]
Contact Seattle Mortgage Planners Today
Seattle Mortgage Planners has years of experience helping new and experienced homeowners in the Pacific Northwest navigate through their real estate and mortgage journeys. From researching the best neighborhoods in the area to refinancing and more, we’re here to help.
Contact us today to set up a consultation.