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How to know how much to offer on a house

Life would be so much easier if a calculator could factor in all your variables and spit out the perfect offer amount.

But that would be impossible. There is no one-size-fits-all answer. There are, however, several guidelines that will get you in the ballpark.

Working with a knowledgeable real estate agent will get you a long way. But since it’s your money (and house) on the line, you’ll want to understand how the market works.

Let’s start with the difference between a buyer's market and a seller's market.

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Buyer's vs. seller's market

In a buyer's market, there are more sellers than buyers. When supply outweighs demand, buyers have the upper hand. Since it’s so hard to find an interested buyer, sellers are more likely to be flexible on price.

A seller’s market is the opposite: Hordes of homebuyers fight over a limited supply of houses. This drives prices up and takes away your negotiating power as a buyer. If a seller is getting three offers per day, there's no reason for that owner to budge on price.

Markets vary from location to location. But they also vary according to price range. For example, in your area you could have a seller's market for sub-$300,000 homes but a buyer's market for pricier properties.

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What to offer on a house: It depends on how you value it

While market conditions play a big role in how much to offer on a house, they're not the only factor. Here are some other indicators to consider.

When to make a low offer

In a buyer’s market, you almost always want to negotiate a cheaper price. After all, what do you have to lose?

Apart from the market, you may also want to offer low if:

  • The property seems overpriced based on recent data (e.g., comparable homes recently sold in the neighborhood).
  • The house has been on the market for a long time.
  • The seller has already tried lowering the price once.
  • There are repairs or updates you will take responsibility for.
  • It’s not your dream house, but you’d take it for the right price.

If you decide to make a low offer, be careful not to go too low. You don’t want to offend the owner and lose the deal. It’s usually safe to offer 10% below the asking price.

If a house has been listed for ages and you sense the seller is desperate to get rid of it, you could try pushing that to 25% (at your own risk).

When to accept the asking price

If the listing price seems fair, sometimes your smartest move is to accept it and skip negotiating altogether.

This is most often the case in a balanced market, where home supply and demand are about in equilibrium.

It’s also possible to pay the asking price in a seller’s market if the home was listed only recently. If you offer the asking price to a seller who wants to sell as fast as possible, you might get lucky.

Just make sure you’re willing to lose the deal if someone else swoops in and offers more.

When to offer more than the listing price

When houses are selling at a blazing pace, you may be forced to make a high offer if you want to compete with other buyers.

The trick is to know how much is too much. There is no exact science to this, but your agent can help you gauge the competition.

In the end, it might just come down to how much you love the house. If it’s everything you’re looking for and you can’t bear the thought of losing it, offer more to lock it down.

But your offer still needs to align with the home’s appraisal value. And note that an appraiser is not going to factor your love for the home into the price.

Things to look out for when putting an offer on a house

Here are some important questions to ask yourself when calculating your offer:

1. How long has the home been on the market?

Most listings you find online will show the date the property was listed. If not, your real estate agent should be able to look it up in the multiple listing service (MLS).

The longer a house has been on the market, the more motivated the seller will be to negotiate. After all, it’s no fun wasting money on property taxes for an empty house. Sellers may reach a point where they’re willing to accept any reasonable offer.

2. How does the home’s price compare to other similar ones in the area?

More specifically, how does the price compare to comparable houses in the area that were recently sold (known as "comps")?

The list price may have made sense last month, but the market could have changed.

If the property you’re interested in is listed $15,000 higher than recent comps, show this data to the seller, and offer a fair price.

You can search for this data yourself, but your agent will have a better idea of which properties are considered comparable.

3. Do sellers have any tricks up their sleeves?

Some sellers purposely set their prices low, hoping to attract multiple offers that will drive the price back up. If you see a low price in a balanced market, be careful not to get sucked into a bidding war.

Other sellers set their prices higher than the market value to give themselves the upper hand when negotiating. This is why it’s so important to check recent comps.

4. What other ways can you make your offer attractive?

Raising your bid isn’t the only way to make your offer more attractive.

Sometimes a lower, all-cash offer is more appealing than a higher, financed offer.

To sweeten the deal, you could offer to skip the home inspection. If there are hidden problems with the property, forgoing the inspetion may come back to bite you. But it can be a strong bargaining chip.

Lastly — and this may sound silly — you can strengthen your offer simply by being a friendly person. Many sellers have strong sentimental connections to their houses. If there are multiple offers, a seller might just choose the most likable person.

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So, how much should you offer on a house?

Essentially, it comes down to how badly you want the home. What’s it worth to you? What can you afford?

As you make your decision, don’t forget to consider not only the selling price but also your mortgage interest rate.

By comparing several different mortgage lenders to secure the lowest possible rate, you’ll shave down your monthly mortgage payments and the total cost of your home.

While the offer you make is important, in the end it’s only one piece of the homebuying puzzle.

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Mitchell Glass Freelance Contributor

Mitchell is a freelance contributor to Moneywise.com.


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.