5 Questions to Ask Yourself Before Setting Your Offer Price

5 Questions to Ask Yourself Before Picking an Offer Price

Today’s buyers do more legwork than any other generation of home buyers, on everything from mortgage rates and programs to neighborhoods and schools, to comparables for the home they want, because so much more of this information is freely and easily accessed online.  But none of that information diminishes the anxiety around making the final decision what number to ink onto an offer for a home.  In fact, this inundation of information can shift a normally sane buyer into overwhelm and overload, and actually interfere with smart decision-making.

And the decision of what to offer to pay for a particular home is particularly high-stakes – one you don’t want muddled by panic or irrelevant inputs. On this one number hinges whether a particular home becomes your home – or not.  It also represents a near-final step in one of the biggest financial commitments you’ll ever make.

No pressure.

If you feel like the final dollar amount selection is a little bit of a stab in the dark, on a subject you’d rather be able to handle confidently and with precision, let’s talk. Here are five questions you should ask yourself to collect the targeted and essential information you need to pinpoint your exact offer price:

1. How close/recent/similar are the comps – and what story do they tell?  Your agent will present you with the recent sales prices of similar homes near your target home (assuming you’re in an area where there are recent sales). This information, in conjunction with the listing price should begin to narrow your thoughts on offer price into a ballpark price range.  But once it’s time to pin down a precise offer dollar amount, it behooves you to look beyond the sales prices of the comparables and to work with your agent to suss out the story they have to tell – and what implications that story has for your own offer price.

In particular, you’ll want to look at the listing details and even the photos of the comparable properties to understand which ones are truly similar – or dissimilar – to the property you’ve targeted, beyond the basic specs.  If a home that has the same number of beds, baths and square feet as ‘yours’ had archaic, out-of-date kitchens and bathrooms and a massive electrical pole in the front yard when it sold six months ago, it might not be as good a comparable as a home that just sold 3 weeks ago with similar upgrades and updates to your target property, even if the latter comp has one less bathroom than yours.

Also, look for the bigger picture story that the comps are telling you.  Did all the most similar comps sell for more than, less than, or right at the asking price? If they all sold for 5-10% over or under asking, that suggests the direction you might need to move from the list price. How long did it take for them to sell, and how long as your target property been on the market, by comparison?  If everything is selling in 30 days, and the house you’re trying to buy has been on for 75, the takeaway might be that you can be more aggressive in offering a price below asking than you might if the place has only been on 20 days.

I can’t emphasize enough how critical it is to collaborate with your agent when it comes to gathering this fuller picture and story from the data on recently sold nearby properties and applying it in the course of setting your own offer price. 

2.  What kind of shape is the place in?  Fixer-upper homes may not qualify for low-down payment FHA financing. That can force you to come up with a larger down payment or evaluate the feasibility of obtaining a rehabilitation loan. On the other hand, if you had planned to put a large amount of your cash savings down on a home that needs a lot of fixing, you might want to conserve some to fund repairs.  In these cases, it’s very helpful to review any disclosures or reports the seller has made available. It’s also essential to include your mortgage broker in the offer-price setting conversation, as condition issues might impact the loan programs available to you and, thus, the down payment, closing cost and monthly payment required at a given offer/purchase price point.

I’ve seen buyers that had planned to buy a fixer shift their offer price upwards because they knew a home was in move-in condition, and vice versa – people who had planned to buy a non-fixer end up coming down on their target price to hit the rehab loan guidelines and/or conserve down payment cash and redirect it to post-closing repairs.

It’s wise to have a quick conversation with your mortgage pro before you decide upon your final offer price in any event, but it’s particularly necessary if the place has obvious condition issues.

3.  What’s the competition like?  If you’ve ever watched an auction on television, you’ve gotten a glimpse into the difference between making an offer on a home where you’re the only buyer, and making an offer on a home where even 1 or 2 others are vying to get it.  And that difference can usually be measured in thousands of dollars.  It’s a simple, but profound truth: if you know there are other buyers competing for a property, you’ll likely want and need to offer more for it than you would if the players were limited to just you and the seller.

And the more buyers are bidding, generally speaking, the higher the victorious offer price is likely to be.

How will you know what your competition is like?  Ask your agent – and they’ll likely give the listing agent a ring, let them know you’re serious about making an offer and feel out whether there is competition or not, and how fierce it is.

The most frequently asked question I get about how this works is this:  don’t listing agents just lie and say there are more offers than there are?  It’s possible, but improbable.  Every agents know that some buyers can’t or won’t bid more than asking on a given home. Accordingly, every listing agent I know would rather have a sure offer from a buyer who loves the place than risk running that buyer off by fabricating multiple offers that don’t exist.

4.  How much do you want it?  Your personal desire and motivation level to get a particular property is an absolute must to factor into the offer price decision-making mix, especially when you get close to putting a final number of dollars and cents on the table. Of course, your home is an asset and a major investment, so your offer price is a decision about which you want to be smart, logical and deliberate. But we’re also talking about the place that will serve as the backdrop and environment for your everyday life, and your family’s lives, too.  To ignore the emotional impact and logistical implications of the place you live when you’re deciding what to offer is to make the decision based on an incomplete portfolio of information.  (And that’s also how so many buyers who lose properties end up regretting their offer price, wishing they had offered just a smidge more for “the one that got away,” sometimes for years on end)

The need to tweak your offer priced based on your motivation level (within the range of what you can afford, of course) is particularly true when it comes to multiple offer situations. Would you regret it if another buyer got the place at X price? Then you should offer X price.  Would you be disappointed, but totally comfortable with knowing you’d offered as much as the place was worth to you, if the seller turned down your offer at Y price? The price at which you can answer that question with a ‘yes’ is a good boundary for the absolute max you should offer.

When you are actively bidding in multiple offer situations, you might never get the opportunity to nudge your price upwards or go back and forth with the seller.  Asking yourself these questions can help you pinpoint your precise, best offer so you can make it, then let the chips fall where they may, without regrets.

5.  What can you truly afford?  No, really.  It’s not that you haven’t asked yourself this question, worked through your monthly financials, pored over the numbers with your mate, your financial planner and your mortgage broker ad nauseam.  It’s more that a lot of time can elapse between that deep financial dive and the time you actually have to decide how much to offer on a particular home. And in that time, lots of variables might have changed:

·         Interest rates might have changed.
·         You might have decided you need to move your price range up, because you can’t      find anything that works in a lower range.
·         You might have realized you need to offer more than the asking price, due to the competition.
·         Your expenses might have changed, because you had to put a kid in daycare or start some new service up.
·         Your cash cushion might have changed, because you had to repair your car or fix something at your existing house.
·         Your cash needs might even have changed, as you realize the home you are trying to buy needs a lot of work that will take a lot of cash.  And so, throughout the course of a house hunt, it’s not at all bizarre to experience price range creep. The best practice is to walk through the comps with your agent, determine their story, get as much information as you can about your competition and the home’s condition and get clear about how much you want the place then, just before you finalize your offer price, touch based with your mortgage broker or banker and tell them what you’re planning to offer. Ask them to give you an updated set of numbers, including what your down payment, monthly payment and cash to close would look like at that price, based on today’s interest rate.Then, you’ll be in a position to make that offer confidently.  I can’t promise you’ll have no anxiety at all, but you’ll certainly feel less like you’re taking a stab in the dark and more like you’re positioned as well as you possibly could be.Agents:  What questions and considerations do you walk through with your buyers, before finalizing an offer price?

Buyers/Homeowners:  What pre-offer questions came up for you, and what information did you tap to resolve them?

Positive Housing Indicators for Third Quarter Lancaster PA

Positive Housing Indicators for Third Quarter
LANCASTER—According to a report released today by the Lancaster County Association of Realtors®
(LCAR), there were 1,307 sales in the third quarter of 2012, a 17.3 percent increase
from the 1,114 units sold during 2011. The five-year average number of sales for the third quarter is 1,187. There were 432 sales in July 2012, 491 in August and 384 in September compared to 357 sales in July 2011, 408 in August and 349 in September. Year-to-date there have been 3,494 sales in 2012, a 15.4 percent increase compared to the same period in 2011 of 3,028. The average sale price for September is $189,584, an increase of 11.6 percent from the September 2011 price tag of $169,934. For the third quarter of 2012, the average sale price was $186,341, a 5.0 percent increase from the $177,482 average sale price for the third quarter of 2011. The five-year average sale price for the third quarter is $189,699. The median sale price for September 2012 is $169,000 (half of the properties sold during this period sold above the number, and half sold below) compared to $162,500 in September 2011. The median sale price for the third quarter of 2012 is $169,900 compared to the third quarter 2011 median price of $165,000. For September there was a 2.6 percent decrease from the 605 new listings in 2011 to the 589 new listings in 2012. For the third quarter, new listings remained virtually the same at 2,007 in 2012 and 2,006 in 2011. The five-year average of new listings for the third quarter is 2,120. Pending sales, homes that went under contract in the month of September, increased 38.5 percent
from 299 in 2011 to 414 in 2012. Over 52 percent of homes that sold in September were on the market 60 days or less. “Without government assistance or programs, the housing market is gradually healing on its own,” said LCAR president Quentin Miller. “Pent-up demand paired with really favorable housing conditions gives us every reason to be optimistic that our local market will continue to post favorable numbers as we move into the final quarter and the new year ahead.”

“While all real estate is local, the indicators show that overall the market is recovering slowly in Pennsylvania,” said PAR president Frank Jacovini. “We know that homes in good condition and priced correctly are receiving multiple offers in the last several months, which is something we haven’t seen in the last couple of years.” Lawrence Yun, NAR’s chief economist, said favorable buying conditions get the credit. “The housing market is
steadily recovering with consistent increases in both home sales and median prices. More buyers are taking advantage of excellent housing affordability conditions,” he said. “The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizable stored-up housing demand that accumulated in the past five years.” LCAR, representing over 1,300 members involved in all aspects of the real estate industry, is one of more than 1,800 local associations nationwide which comprise the National Association of Realtors®
.

Lancaster PA 3rd Quarter Sales

According to a recent report by LCAR, there were 1,307
sales in the third quarter of 2012, a 17.3 percent increase
from the 1,114 units sold during 2011. The five-year
average number of sales for the third quarter is 1,187. There were
432 sales in July 2012, 491 in August and 384 in September
compared to 357 sales in July 2011, 408 in August and 349 in
September. Year-to-date there have been 3,494 sales in 2012, a
15.4 percent increase compared to the same period in 2011 of 3,028.
The average sale price for September is $189,584, an increase of 11.6
percent from the September 2011 price tag of $169,934. For the third
quarter of 2012, the average sale price was $186,341, a 5.0 percent
increase from the $177,482 average sale price for the third quarter
of 2011. The five-year average sale price for the third quarter is
$189,699. The median sale price for September 2012 is $169,000
(half of the properties sold during this period sold above the
number, and half sold below) compared to $162,500 in September
2011. The median sale price for the third quarter of 2012 is $169,900
compared to the third quarter 2011 median price of $165,000.
For September there was a 2.6 percent decrease from the 605 new
listings in 2011 to the 589 new listings in 2012. For the third
quarter, new listings remained virtually the same at 2,007 in 2012
and 2,006 in 2011. The five-year average of new listings for the
third quarter is 2,120.
Pending sales, homes that went under contract in the month of
September, increased 38.5 percent from 299 in 2011 to 414 in
2012. Over 52 percent of homes that sold in September were on
the market 60 days or less.
“Without government assistance or programs, the housing market is gradually healing on its own,” said LCAR president Quentin Miller. “Pent-up demand paired with really favorable housing conditions gives us every reason to be optimistic that our local market will continue to post favorable numbers as we move into the final quarter and the new year ahead.” House Calls A MONTHLY REVIEW OF THE RESIDENTIAL REAL ESTATE MARKET IN LANCASTER COUNTY November 2012 Vol. 11 Issue 14  Home Sales Report page 2  Mortgage Rates page 4  Third Quarter Sales Statistics, page 4  Year-To-Date Home Sales Report page 3  Third Quarter Sales Graphs, page 4 Positive Housing Indicators for Third Quarter

Note: All 2012 statistics in this issue are from FlexMLS as of October 15, 2012

Cash Back Home Buying Are You Able to Get Cash Back When You Buy or Sell Your Home

Hello every one. As we look to Buy or Sell a home we often look at the price of the home and what it will cost to close. The little known fact is that, You may be able to get Cash Back after you close on your home. This is a great thing and you don’t have to wait for a government bail out or any thing. This is money that is coming from your Employer’s programs that I can help you get. In some cases you can get up to $5,050 cash back after you buy or sell your home. With on program you can get up to $5,050 cash back and up to $2,500.00 of your closing cost paid for. Can you say wow, none of this money get’s paid back to any one even if you sell your home the minute after you close. They call it a Cash Bonus. Some companies offer them for there Employee, member’s and even Customer’s. If your looking at homes for sale or if your looking to sell your home you should call me first. (717) 735-6284. These programs are free and cost you nothing. You don’t have to be looking to buy or sell a home in Lancaster, PA either. I can help you any where in the USA. Yes I am a Realtor and I help my clients get this cash back all the time. Why not it’s free money you can use it for any thing. You normally get the check in the mail with in 3 weeks of closing. Now I will mention a few of the programs and tell you a little about how they work. Military if you are a Veteran or Family of a Veteran you could get up to $5,050 cash back and up to $2,500 in closing cost paid for when you buy or sell a home. They are broken down in to part’s. One is the USAA mover’s advantage program and the other is the Navy Federal  Realty Plus program. It don’t stop there are you a client of Merrill Lynch Credit Corp then you could get get an even better deal. up to .36% of the sale price of the home. So your a Merrill Lynch Credit Corp client and your looking to buy a 2,000,000 dollar home some where in the USA. You could get up to $7,000 cash back 3 million that’s up to 10,500 cash back after you close. Cash money. Are you an Employee of the shell oil Company you could get up to $2,500.00 cash back after closing. Are you an Independent business owner or member of Amway (Quixtar) yes you can get cash back. Now for all you people that own homes already Chase customers you can get up to $2500.00 back when you buy your next home. Office Max employees or a member of overstock.com you guys can get cash back too. Employees of Sears Holding / Kmart  you can get up to $3,000 cash back when buying or selling a home.

So now that you have the idea about how this works I am going to list below the Companies that are offering cash back or other thing like American Airlines Miles from Home members where they give you Air Miles on your AAdvantage miles after you buy a home.  I am going to list all companies that are in our programs below call me for more details what you are entitled to and enrollment into the programs for your cash back.

AA Credit Union
AAA Mid Atlantic
Agilent Technoloqles
AIiSouth Credit Union
Allstate
AMCORE Bank
American Airlines
American Family Insurance (AFI) # 20828
American Standard
Ameriprise FA
Ameriprise Financial
Amtrak
Amway (Quixtar)
AOL
Apple Computer
Archstone Communities # 21272
ATI Physical Therapy
AT&T
Autobytel
Avnet
Banco Popular
Banks
Bethpage Federal Credit Union
Black & Decker
Boy Scouts of America
Bristol-Myers Squibb
Burger King
Calpine Corporation
Carlson Companies
CFE FCU
Chase
Chase Union Plus HLD
Chase Union Plus Retail
Chrysler # 20474
CIGNA Corp.
Cisco Systems
Citi-EE
CNF
CompleteHome
Constellation Energy
Credit Union Real Estate
CSAA
CUSO UNFCU Advisors (United Nations Federal Credit Union)
Dow Chemical
Eli Lillv & Company
Entergy
Equity Residential
Esterline I Korry Electronics # 20378
ExxonMobil
Federal Express Ground
FHA.com
Friends & Family (miscellaneous clients)
GE
General Dynamics
Government Realty Services
Heinz
Hitachi Semiconductor
International Rectifier
Island Federal Credit Union
JCPenney
Johnson & Johnson
Joy Global (P&H Mining Equip)
J.R. Simplot
Katy, Texas
KeyBank
Lockheed Martin
Marsh & McLennan
Medlmmune
Melaleuca # 26352
Memorial Day School #20160
Merrill Lynch Credit Corp.
Mitre
MOAA
Mobility Real Estate
MortgageLoan.com
Nassau Educators Fed Credit
Navy Federal Credit Union
Newlywed Food
Northop Grumman
Northshore Health System Fed. Credit Union
Office Max
Omni Hotels
Omega Federal Credit Union
ORNL Federal Credit Union
Owens Corning
Overstock. com #20870
Partners FGU #23700
Peachtree Pest Control
Philips Medical Systems
Philips Semiconductor
Portola Packing
Pratt Whitney
Private Sale Partners
Qwest Communications
Raytheon Company
Realogy Corporation
SAFE Federal Credit Union
Sankyo Pharma
SAP Labs/America
Sears-Holding/Kmart
Security Service Federal Credit Union
SeniorRelocationUSA.com
Shell Oil Company
Siemens Westinghouse
Southern Company
St. Jude Medical (CRMD)
SYSCO
Team Ivy
Telhio Credit Union
Texans Credit Union #20899
Thomson Inc.
Time Inc.
Trinchero Winery/Sutter Homes
United Airlines
United Health System Consortium (UHC) #20842
United Nations FCU
United San Antonio Fed. C.U.
United TeleTech Fed. C.U.
United Technologies
USAA
VALoans.com
Verizon # 20737
Wackenhut
Warner Music Company
URS Energy & Construction # 20944 (old:Washington Group Intll)
Waste Manaaement
Weyerhauser
Wells Fargo
Whirlpool
Wyeth
Xerox