What to Offer for Your Dream Home

Congratulations! You have found your dream home! Now, you have to decide how much to offer for the home of your dreams. After all, you don’t want to pay more than you have to pay for the home, but you also don’t want to offer so little that your offer is not accepted and your dream home is lost forever. By keeping a few guidelines in mind, you will be better able to determine what to offer for your dream home.

Exploring the Limits

When determining how much to offer for your dream home, you first need to decide on both your upper and your lower limits. Simply put, your upper limit should be set at how much you can afford to pay. This doesn’t mean setting your upper limit at how much you think you can pay. Rather, you need to sit down and really crunch some numbers in order to determine how much you can realistically afford to pay for your home. To take this a step further, you might want to consider getting pre-approved by a mortgage professional. This way, you will be absolutely clear on your maximum price range before you even start looking.

On the other end of the spectrum, you also need to set a realistic lower limit goal for the home you wish to purchase. While you will undoubtedly want to offer 20 percent less than the asking price and hope for a great deal, this is not a realistic expectation. Rather, in Oahu, the sell price typically ranges anywhere from 96 to 99 percent of the list price. Use this as a guideline to help you better determine the lower limit of a possible offer. Remember, offering too far below the list price likely will not even result in a counteroffer, so be realistic when setting the lower limit.

Factors to Consider

As you work on coming up with a reasonable offer for your dream home, there are four basic factors that you should consider. These include:

  • Comps: Analyzing recent comparable sales, also referred to as simply “comps,” will help you get an idea of what buyers are currently willing and able to pay in the market where you are looking to buy.
  • Inventory: Supply and demand drive all aspects of the economy, including real estate sales. Therefore, you should research the current inventory as well as the median number of Days On Market (DOM) for comparable properties. If homes are selling quickly and inventory is small, you will not have as much room for negotiation as you would if homes are sitting on the market for a long period of time.
  • Seller’s Motivation: If the seller is in a position where he or she needs to sell the property quickly, you will have more room for negotiation as compared to a seller who is not in a hurry to sell. Your real estate agent should be able to do a bit of research to better determine why the seller is selling and how flexible the seller is likely to be.
  • Your Motivation. Of course, your motivation to buy is another factor to consider. If you absolutely love the home and don’t want to risk losing it, you need to be more willing to offer a higher price than you might be if you had several properties that suit your needs.

By working closely with your real estate agent, you will be sure to come up with the right offer the property of your dreams!

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