Knowing how to make a successful bid on a house can mean the difference between walking away with the house of your dreams and losing a bidding war with another motivated buyer. It can also mean the difference between getting stuck with a money pit and buying a beautiful house with lots of value.
First Impressions
So, you are excited about buying a house you just found, and you want to know how to make a successful bid on a house. You saw another couple driving up to look at the house right after your appointment, and you want to make sure that this house ends up being your house. So what can you do?
First, take a minute to back up from the situation. Remember that you’ll want to do a home inspection, and there may be problems lurking in the roof, walls, and foundation that could make this house a money pit. Also, this may well be your most significant financial investment, and you want to make sure that the price you agree to isn’t unfairly high.
This can be an excellent reason to have your own Realtor, instead of using the seller’s Realtor for both ends of the transaction. Your Realtor can find out if other bids are on the property more easily than you can, and also offer you details about the listing, including the amount of time the house has been on the market, any reductions in price since the initial listing, and other factors that could affect your bid.
Starting the Process
When considering how to make a successful bid on a house, you’re going to want to know how much house you can afford . Then, back up and bid less than you can afford – generally, somewhere between five and ten percent less than the seller’s listing price.
There are several elements in the process that will affect this bid, however. What are the comparable transactions in the neighborhood? Are homes in this neighborhood selling quickly? Has there been a lot of interest in the house you want to buy?
What are the market conditions like? If prices are trending downward, this will also affect your bid. Your Realtor can give you a competitive market analysis (CMA) for the neighborhood, and you can research public records and the Multiple Listing Service (MLS), but those records get outdated quickly.
Are there house-specific factors that could move the price up and down? Unique architectural features and upgraded interior amenities can drive the price up, while a disclosed foundation problem could drive it down.
Once you’ve prequalified for your bid amount, send it to the seller. Try and prequalify for more than your bid amount, in case you have to go back quickly with a response to the seller’s counteroffer.
Once you’ve made your offer, if it’s accepted, you’ll move into an option period – that’s when you’ll order your own inspection and find out if there are problems that would make you want to walk away from the house. But that comes after the offer.
Use your Realtor as a resource – he or she will know the market area and can give you specific advice about the best offer for your particular situation.
References
- Lending Tree - https://www.lendingtree.com/smartborrower/buying-a-home/making-an-offer/should-first-offer-be-your-best/
- FreddieMac - https://www.freddiemac.com/corporate/buyown/english/purchasing/offer/negotiate.html
Image Credits:
- Money - (Wikimedia Commons )
- House for Sale (Freedigitalphotos )
