Building Wealth One House at a Time, Updated and Expanded by John Schaub

Author:John Schaub
Language: eng
Format: epub
Publisher: McGraw-Hill Education
Published: 2016-09-29T04:00:00+00:00

Picking the Price for Your Offer

As the buyer, your offer should be at a low enough price or with such good terms that you will be very happy if the seller accepts. If you are not at least a little embarrassed by your first offer, you are offering too much. You should fall off your chair if they take it (and sometimes they do).

Plan ahead in order to make your offer good for you. Don’t be overly concerned about what the sellers will accept. They will let you know if you are too low.

It is good strategy to ask for more than you really need to make the deal. The exception would be when buying from a distressed seller, which is covered later. Most sellers set the sales price a little high, anticipating that a buyer will make a lower offer. They may have a bottom-line price in mind.

Research what other comparable houses have sold for recently, and then compare the price of this house with those prices. Adjust the price for differences in condition or size, and then make your first offer below what you need to buy the house for to make a profit.

Suppose that a seller is asking for $250,000, and after researching the neighborhood you find that other comparable houses have sold for between $200,000 and $240,000 and that those houses were in better shape than the seller’s. You determine that the seller’s house is really worth between $200,000 and $220,000. Sometimes houses are on the market for years because they are overpriced. These houses can be opportunities, because the seller eventually becomes more motivated to sell and the market values catch up with her high price.

You decide that you would like to buy this house for about $175,000 and the owner wants $250,000. The house is vacant and needs cosmetic repairs and has been on the market for a year. Your first offer should be $160,000.

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