In making an offer to purchase a home, there are many small and large decisions to make (closing date, home inspection, closing cost credit, etc) --- but the decision that often has a 30-year impact is the offering price.  A few short years ago (2003/2004), most buyers were offering at or very close to the asking price, as homes were "flying off the shelf" they were selling so fast.  These days you'll typically have a bit more time to consider your offering price, which should include thoughts and discussions about...

1.  Recent Sales
Perhaps the most important of all factors, at what price have comparable homes recently sold?  You likely won't want to pay too much more that the price for which other buyers have recently paid for similar properties.  This is often much easier thought than analyzed, as there are many homes where it is difficult to find directly comparable home sales.

2.  Competing Properties For Sale
It is also important to reflect on the price you would pay if you bought an alternative house that is also for sale and that is reasonably similar to the house you are actually considering purchasing.  If an owner is asking $250K for their home, even if other homes have recently sold around $250K, it would be important to know if three other comparable homes are currently for sale for $205K.

3.  Seller's Acquisition Cost
This information is not always available, and is not always pertinent, but it can guide conversations about an offering price.  If two owners are both trying to sell their homes for $250K, and one bought their home for $150K and the other bought their home for $220K, the price you might offer on one house would be quite different than the second.  Again, this is not always pertinent, as most owners won't want to sell their home at a price that they perceive to be under market value just because they can based on what they paid for it originally.

4.  Length of Time on the Market
Again, this won't always make an impact on the price that you will have to pay to purchase a particular home, but the owner of a home on the market for a week would see an offer of 85% of the asking price very differently than the owner of a home that has been on the market for two years.

5.  Your Finances
Perhaps the most important factor, you must make an offer at a price that is comfortable for you when it comes to the associated monthly housing costs.  Sometimes this means making an offer which you suspect will not be accepted, but some financial/budgetary rationale must be inserted into the conversation at this point.

There are many other ways to look at the asking price as you determine the offering price --- and indeed, each home sale scenario is different, so beyond this quick guide, determining the offering price warrants an in depth conversation. 

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Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com