When it comes to making an offer on a home, timing is key!
You don’t want to jump too quickly and offer up more money than necessary. But you ALSO don’t want to wait too long and miss out on a great home.
In this blog post, we explain…
- what to consider before putting in an offer on a home,
- how to decide on an offer amount,
- and when to make the leap.
Before You Make an Offer on a Home
Before you jump to make an offer on a home, there are several factors to consider.
The housing market.
Conduct research on current housing market trends in your area. Although the entire country is experiencing a seller’s market right now, your area may have a market that is a little more favorable to buyers.
You’ll want to get a pulse on…
- Current home prices in the area
- The demand for similar-priced homes in the area
- The inventory of homes to choose from
- Mortgage interest rates
- And how quickly the market is moving
Your real estate agent can provide critical help in this part of the home-buying process. With their local market expertise, they can provide a comparative market analysis that will allow you to determine a fair price for a home in your budget.
Early on in your home search, you are going to want to set your budget.
The three primary costs you should incorporate into your budget include:
- Down payment (which can range from 0% to 20%, depending on your loan)
- Closing costs (generally between 2% and 5%)
- Moving expenses (including travel, moving company, etc.)
Be slightly conservative with your budget. You will want to have a little wiggle room in case any unexpected costs arise.
Once you determine your budget, the next step is to get pre-approved for a mortgage. Minimally, you will need what is called a Conditional Approval. This document essentially states that you will most likely be approved for a loan of a particular size if all of the information you’ve given the mortgage lender is correct.
However, this is still just a “conditional” approval. You still need to get your official loan offer from the bank, which can happen later in the home buying process.
The home condition.
It’s not yet time to do a home inspection, but you can get a good idea of a home’s condition if you pay close attention during your home tour. Determine what kind of repairs and renovations will be necessary once you move in.
Some things you should look out for include:
- Roof damage
- Stained, cracked, or damaged floors, ceilings, or walls
- Old outdated HVAC and electrical systems
- Cracks in the foundation
- Water damage
- Signs of termite damage
- Strange gas odors
- And signs of leaky plumbing
In addition to major repairs, you should also consider the cost of any renovations you might want to make in the first couple years living in the home. If you anticipate making substantial renovations to a low-priced home, make sure you are still getting a good deal after adding those costs.
The seller’s situation.
With a quick search of public records and real estate listings, you or your real estate agent might be able to gather valuable information about the homeowner’s motivations for selling.
See if you can tell how long the house has been on the market and determine the seller’s level of urgency. Or, perhaps you will learn the seller wants to delay closing because of a set move date or their own home-buying challenges.
You can use all this information to present a winning offer and/or secure a good deal!
The home-buying competition.
How desirable is the home? If it is affordable AND in good condition, you will likely face more competition from other potential buyers. In this case, you may consider a higher offer.
Some things that could make a home more competitive include:
- Convenient location
- Safe neighborhood
- Absence of major repairs
- Modern or updated features
- Relatively recent build
- Affordable asking price
- Plenty of square footage
- Covered garage, fenced-in yard, and other preferred features
If you are particularly interested in a home after a home tour and think you may face significant competition, consider making an offer quickly – especially in today’s fast-moving housing market.
How to Decide On an Offer Amount
To determine an appropriate offer, you can start by looking at the prices of comparable homes.
Home search apps like Zillow and Homesnap allow you to view the sale prices of other houses in surrounding neighborhoods. Take advantage of these tools! See how the asking price matches up with the prices of nearby homes of the same size and condition.
If the seller is asking for an amount too far above the price range of the homes in the surrounding area, you may be able to get away with a lower offer.
Remember, you should never feel pressured to make an offer you don’t feel comfortable with. Before you even start looking for homes, you should decide the maximum offer you are willing to make (see the “Your finances” subsection above).
When to Take the Leap
Now to the big question – when is the right time to submit your offer?
The answer to this question depends entirely on your situation and the home you want to purchase. In a seller’s market like the one we are in today, buyers are unfortunately required to act fast to make an offer on a home.
The best way to effectively time your offer is to work closely with a local real estate agent. An experienced, local agent can help you decide an appropriate offer amount and when to pull the trigger.
Network Real Estate | Wilmington, NC Region
Network Real Estate has earned a strong reputation for our excellent customer service and knowledge of local real estate. If you’re looking for REALTOR you can count on, you’re in the right place!
Let’s help you secure your ideal home! Call our agents today at 910-395-4100.
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