Here’s my process for determining the right price for every buyer’s offer.
If you’ve been paying attention to the market, then you know we’re living through an unprecedented seller’s market. When demand is high and supply is low, it can be hard for buyers to break through and get a home they love. Today, I want to discuss how much buyers should be offering to win the home of their dreams.
How high your offer should be is different for every buyer, but it always comes down to a few factors:
First, how much money are you willing to spend? I don’t know how much you want any given home. Buyer motivation is a key aspect of real estate no matter which side of the table you’re sitting on. If you are a buyer, I’ll go over how to determine your motivation shortly.
Second, how much are competing buyers willing to spend? This factor is unknowable. I can give you an estimate based on the quality of the home and what I think it should sell for, but it’s still just an estimate.
So there are a lot of unknowns in determining an offer’s price. However, we still manage to come up with a number. Let me explain my three-step process for determining price:
1. How much do you want the home? I always ask my clients to give me a number from one to 10. This is a good benchmark to start with.
2. How desperate are you? Once again, I ask my clients to give me a number from one to 10. One means you’ve just started looking, and you wouldn’t be devastated if you lost the home. 10 means you’ve been searching for months and this is the 11th property you’ve made an offer on.
3. What is your financial situation? For finances, a one would mean the home is way outside your price, while a 10 means you can go a bit over list price.
Together, we’ll work to create an offer that fits your circumstances. Too often, I see people try and predict what other buyers will try and do, but this can easily lead to making an offer outside your price range.
There are a lot of buyers with a 10 in desperation but not necessarily a 10 in motivation or finances. No matter what happens with your offer, it’s important that you don’t feel like you left something on the table or overplayed your hand. You want to make an offer that fits your situation above all other considerations.
There is no one-size-fits-all approach to real estate in this market. If you hire an expert, they can help create a personalized approach that works for you. If you have questions about today’s topic or any ideas for future blog topics, please reach out to me via phone or email. I am always willing to help!