I'm often asked by my Spring TX first time home buyers "How much under the listing price should we offer?" This is an excellent question. As I had told you at the end of part 3 (the home search) we will run comparatives going back 6 months to see how the home is priced compared to other homes that have sold in the area.
I have found that Spring TX sellers price their home differently for different reasons.
1. Ridiculously Overpriced!
Often these sellers have an unrealistic expectation of what their home is worth. I have found these sellers usually shop real estate agents until they find one that will agree to list at their ridiculous price. These homes can be 10 to even 30% overpriced. These sellers may need a "dose of reality" for a few months before they begin to realize that their home is way overpriced as compared to others in the area. If we find a home that is overpriced like this and the listing is new on the market I have found it is sometimes better just to move on. The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price.
2. A Little Overpriced!
These sellers usually fall into 2 categories:
1. The sellers that feel their home is worth every penny of their asking price.
2. Those that want to leave a little "negotiating" room.
These homes can be 4-10% overpriced. When running comparatives I find many homes that are just a little overpriced.
3. Priced At Fair Market Value These sellers have carefully and realistically studied other homes for sale. They have priced their homes very competitively. These homes usually sell within 4 weeks at or very near the listed price.
4. Priced Below Fair Market Value
These homes are priced below value. Perhaps the seller wants a fast sale. Perhaps the real estate agent recommended too low of a price. These homes usually sell within 7-10 days, at or above the listed price. There are usually competing offers.
At this point we will want to discuss how the Spring TX home is priced and decide what we want to offer. You want to be careful in this step that you don't make such a low ball offer that you offend the seller. If the home is ridiculously overpriced then yes the seller may get offended but so be it. If the home is priced fairly you don't want to come in so low to offend the seller. Most sellers have left some room to negotiate and so it is okay to be a little aggressive but not so aggressive that it is offensive. I remember a listing I had where a low ball offer came in and they also asked for my clients' stainless steel grill and a bed. That was years ago when stainless steel grills were still VERY EXPENSIVE. During the negotiating another offer came in and he jumped at the other offer as these people had totally offended him. My seller was very attached to that grill (it was a standalone grill and was not attached to the house). Asking for the grill was way over the top as far as he was concerned.
Even by carefully studying homes for sale, it's sometimes difficult to establish Fair Market Value. If you're obtaining a new home loan, you'll be protected by the Professional Bank Appraisal. Home lenders want to make sure that you don't over-pay for a home. If the home does not meet value in the eyes of the bank appraiser, you'll be informed. At that time, we can re-negotiate the sale price or void the agreement and refund your earnest money deposit.
My job is to ensure that as a Spring TX first time home buyer you have the tools and information you need to make an informed decision. I will help you prepare the offer. Then I will present it to the seller on your behalf and try my best to get it accepted at your price and terms! My next post will be on the terms beside price that we will be negotiating.
This is a Spring TX first time home buyers series and as I add additional post I will add the links. Please feel free to visit my prior post.
- Spring TX First Time Home Buyers Guide - Part 1 - Loan Pre-approval!
- Spring TX First Time Home Buyers Guide - Part 2 - The Web Search!
- Spring TX First Time Home Buyers Guide - Part 3 - The Home Search!
- Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!
- Spring TX First Time Home Buyers Guide - Part 5- The Home offer!
- Spring TX First Time Home Buyers Guide - Part 6 - The Texas option fee and your home inspection!
- Spring TX First Time Home Buyers Guide - Part 7 - The Title policy
- Spring TX First Time Home Buyers Guide - Part 8 - Why you need to live in an HOA!
- Spring TX First Time Home Buyers Guide - Part 9 - What to bring to your closing!