How Much Should I Offer - The Asking Price

For many prospective home buyers, one of the most difficult moments in the home-buying process comes when they have to decide how much to offer. How much is the home really worth? How low is the owner willing to go?

The offer price should be based on local market conditions as well as on how well the house is priced. Find out how fast homes are selling, and whether they are selling for close to the asking price. In hot markets, well-priced homes sell for very close to the list price. In fact, they may sell at a premium to the asking price. People do this if they believe they'll be competing with other buyers. In slower paced markets, were prices are soft, the gap between the list and sale price may be considerably more than five percent.

Your agent should be able to provide you with comparable sales information. And more importantly should show you comparable listings. If you skip this crucial step, and blindly make an uneducated offer, you could overpay for a property.

Be careful about making a ridiculously low offer. It's true that you may get the house at a great price, but you might also offend the sellers, who then become tough negotiators. A bigger risk in making an inappropriately low offer is that you could lose the house to another buyer who is better informed and who makes a better offer.

Regarding the market history of the house, find out how long the has been on the market. Is the current price the original listing price? Have there been price reductions? If the price has been reduced some time ago, and the house still is not selling, the seller may be considering another price reduction. If so, they may be receptive to a lower offer.

Once you make your offer, one of three things will happen: 1) It will be accepted, 2) It will be rejected, or 3) you will receive a counteroffer