What to offer: How to determine what a home is worth
Finding a home you’d like to buy is only the first step. Once you have decided to make an offer, a whole new round of considerations comes into play. You need to find the balance between offering too much or too little, making sure you get the appropriate value for the money you invest.
We have put together a list of things to consider when it comes to deciding what to offer on a home you’d like to buy. This list is not exhaustive, but it should give you a solid foundation and steer you in the right direction!
- Decide on your budget
Before you start making offers, decide what the high end of your budget is. Work backwards from what you know you would like to spend at the end of the day – that way you won’t get caught in a bidding war you can’t win!
- Check out the “closed comps”
“Comps” are comparable sales in the area that give you an indication of the value of the home. Remember, it is vital to look at houses that have actually sold rather than those that have lingered on the market because they are valued far too high for the area. “Closed comps” can be used as leverage during the buying process and will show that you have done your homework on the area. This will also give you a better understanding of the market you are dealing with, and can help you establish the range your offer will fall within.
- Evaluate the market
Have a look at recent sales activity in the area. Is there a high or a low inventory of houses on the market, and are houses selling quickly or sticking around? Also, check to see if houses in the area are selling for lower or higher than list price. Evaluate whether you think the list price is appropriate for the house you are interested in and factor that into the number you land on.
- Consider renovations
Make sure you factor a renovation budget into your offer price considerations. If you need to put a lot of work into the house you’d like to buy, that money will have to come from somewhere. We find homeowners often drastically underestimate the cost of even simple renovations to their new home. Make sure you know exactly what you want to do and what it will cost!
Fortune (in more ways than one!) favors the prepared mind. Do your homework, and you will be ready to make this important decision with confidence.
If you need help, we are here! Get in touch with one of our local experts for more information.