Recently, a reader asked about making a good offer on a house and I think it makes for a great review.
For new readers of the Tallahassee Real Estate Blog, we often feature questions from readers in order to keep our content fresh and consistent with the current concerns of people who want to sell a home and/or buy a home in this market.
So today we ponder making a good offer on a house, and how to bind our offer.
What To Offer On A House
This just in from reader Jason:
I know of a house that has been on the market for 6 months. If I make an offer of 350,000 dollars on a 400,000 dollars...with a binder of 5,000 dollars...is that a good offer and binder? - Jason
Great question Jason. I will provide a "quick answer," but with a big caveat (every seller has a different motivation level and different quality level of agent representation. Those are the real factors I would need to answer this correctly).
No, it is not a good offer. Here's why:
The house is listed at $400K.
A) If it is priced correctly, why would the seller say "yes" to your offer. At best, you will give up control of the negotiation and force a counter from the seller. A smart offer on a house is one where the seller is scared to counter.
B) If it is over priced, the seller is not ready to sell the home. The seller is still trying to get an unrealistic value for the home. This means the only way that you can get a "yes" from the seller is for you to overpay for the home. You should not even look at homes that are overpriced, the outcome for you is bad regardless.
Again Jason, a very short answer, and I would need to know a whole bunch more before advising you on a specific deal. But I would be greatly surprised if any information on this deal would really change the above advice.
Learn How To Make A Smart Offer On A House
But woe unto the homebuyer who falls in love with an overpriced home. You have few options, and all will cause you pain.
Take the time to view our FREE e-course for homebuyers, Home Buying For Smart People.
So now that you know how to make a smart offer on a house, just drop me a note and we can schedule a time to review your needs and wants and start you on a path to home ownership.
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.