An answer to this question seems to be one of the most frequent I see consumers searching for on the web. It seems that each day I see a consumer post it on sites like Trulia or Zillow.
Determining what to offer on a house is a very important issue, but it is also one that cannot be reasonably answered by anyone other than someone who is involved in the purchase – namely you, your family members and your agent. Unless someone knows what you are looking for and has seen the house you want to offer on and its competition, it’s impossible to put a number on a house. There is no “rule of thumb” that works in today’s market and it is simply crazy to think someone who has no intimate knowledge of the situation can give you better advice than the people who do.
Here are a few tips that can help you decide how much to offer when making an offer on a home:
- Go back to the top 3-4 houses you liked – compare and contrast them
- Have your REALTOR pull up comparables in the area that are for sale or have sold in the last 3-6 months
- Make a list of the features the house you like has or does not have compared to the comparables and assign dollar values for those differences
- Consider what it will cost you to make improvements to the property that you expect to do – compare cost+upgrades to houses that already have the upgrades
- Determine how quickly the seller will respond to offers and what the current offer status is – Is it a one day or one week response? Bank owned or estate? This may impact your offer.
- Consider the financing costs of an offer at different dollar amounts. It costs approximately $6 per month per $1000 you borrow, give or take.
- Decide what the house is worth to you
At the end of the day, you/your family is the one living there and paying the bills so while others can give advice and counsel you on your options, you are the one that needs to own the decision of what to offer.
I’m wondering how much money I should consider bidding on a house offer. I make $32,000 a year. I’m in my mid-20′s. I just worry about overbidding on a house and not being able to afford it later. I know a gazillion loans are out there. Is there a smart resource I can use to estimate how much I truly can afford. I have a few thousand dollars to throw in for a down payment. I know it isn’t much, but any info would be great!
Thanks.
Thanks for passing on your tips for buying at a house. I fear that I’ll get too excited early on in the process–and end up settling on a house/paying way too much.