5 Questions to Ask Yourself Before Setting Your Offer Price – Tara@trulia

These tips come from a California real estate agent who writes for Trulia.  The points apply no matter where you are buying your home:

1. How close/recent/similar are the comps – and what story do they tell?…..But once it’s time to pin down a precise offer dollar amount, it behooves you to look beyond the sales prices of the comparables and to work with your agent to suss out the story they have to tell – and what implications that story has for your own offer price.

In particular, you’ll want to look at the listing details and even the photos of the comparable properties to understand which ones are truly similar – or dissimilar – to the property you’ve targeted, beyond the basic specs………….

Also, look for the bigger picture story that the comps are telling you……

I can’t emphasize enough how critical it is to collaborate with your agent when it comes to gathering this fuller picture and story from the data on recently sold nearby properties and applying it in the course of setting your own offer price.

2.  What kind of shape is the place in?  Fixer-upper homes may not qualify for low-down payment FHA financing…………It’s also essential to include your mortgage broker in the offer-price setting conversation, as condition issues might impact the loan programs available to you and, thus, the down payment, closing cost and monthly payment required at a given offer/purchase price point…………..

3.  What’s the competition like?………………..How will you know what your competition is like?  Ask your agent – and they’ll likely give the listing agent a ring, let them know you’re serious about making an offer and feel out whether there is competition or not, and how fierce it is.

4.  How much do you want it? Your personal desire and motivation level to get a particular property is an absolute must to factor into the offer price decision-making mix, especially when you get close to putting a final number of dollars and cents on the table…………..

The need to tweak your offer priced based on your motivation level (within the range of what you can afford, of course) is particularly true when it comes to multiple offer situations…………………

5.  What can you truly afford? No, really.  It’s not that you haven’t asked yourself this question, worked through your monthly financials, pored over the numbers with your mate, your financial planner and your mortgage broker ad nauseam………

Interest rates might have changed. ·        You might have decided you need to move your price range up, because you can’t find anything that works in a lower range. ·        You might have realized you need to offer more than the asking price, due to the competition. ·        Your expenses might have changed, because you had to put a kid in daycare or start some new service up. ·        Your cash cushion might have changed, because you had to repair your car or fix something at your existing house. ·        Your cash needs might even have changed, as you realize the home you are trying to buy needs a lot of work that will take a lot of cash.

And so, throughout the course of a house hunt, it’s not at all bizarre to experience price range creep. The best practice is to walk through the comps with your agent, determine their story, get as much information as you can about your competition and the home’s condition and get clear about how much you want the place then, just before you finalize your offer price, touch based with your mortgage broker or banker and tell them what you’re planning to offer. Ask them to give you an updated set of numbers, including what your down payment, monthly payment and cash to close would look like at that price, based on today’s interest rate…………………….

Read the full post here —-  http://www.trulia.com/blog/taranelson/2012/10/5_questions_to_ask_yourself_before_setting_your_offer_price?ecampaign=cnews201210D&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2012%2F10%2F5_questions_to_ask_yourself_before_setting_your_offer_price

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