How do I deturmine the initial offer?

Asked by Crags, Brooklyn, NY Thu Apr 4, 2013

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5
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Mon Apr 8, 2013
BEST ANSWER
Good morning Crags,

Before you make offers, you have to know your maximum financing amount/purchase price.

First things first: when making an offer, focus on what your monthly payment will be for the mortgage financing, including taxes and insurance. If that payment is within your means, then your Mortgage Banker will determine the maximum loan/purchase price for you based on all the factors of the monthly payment, your down payment and your mortgage qualifications.


Begin making an offer with the following standards:

1. WISH LIST. Does the home meet MOST of the requirements from your Dream-Home-Wish-List? The Dream Home exists only in our minds; it's NOT out there waiting for you to stumble across it one Saturday afternoon. But you can find the right home using your Wish List. When you find the home that meets most of your requirements from the wish list, then it's time to make an offer.

2. FORGET LIST PRICE. Based on your own research, shopping in your chosen area, select the price you're most comfortable with, regardless of list price/asking price. In other words, you'll find a home listed at $268,000, but you've seen at least a dozen other similarly constructed homes in the immediate area priced or sold at $235,000. What makes this home so special that it's priced $33,000 more than the average price? Remember, your Lender will appraise the home based on similar homes and those prices.

3. MAXIMUM OFFER. Never exceed the price based on your mortgage qualifications, no matter how much you LOVE the home. You have to be able to afford the payment for the next thirty years. That in-ground swimming pool you love isn't going to pay the mortgage for you!

4. OFFERS ARE NOT PERSONAL. An offering price can NEVER be misconstrued as an insult to the homeowner. This is business; you're not going to hurt anyone's feelings! Make the offer based on a price you're most comfortable with!

5. OPENING OFFER. NEVER open with your maximum offering price. Test the waters with your opening bid: you want to see if this Seller is a SERIOUS Seller who understands this is a BUYER'S MARKET. If there's no reaction to your offer---assuming the price you offered is within the reasonable range of current market prices---you may be wasting your time with this home/Seller. It might be time to move on to another home.

See my "Five Steps To Making An Offer" for the best way to negotiate on your home purchase.
http://www.tcurranmortgage.com/2010/04/09/five-steps-to-maki…

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528

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1 vote
Bev West, Agent, Greeley, CO
Mon Nov 4, 2013
Work with your Realtor and have a market analysis completed and go from there. Always remember you run the risk of losing the property to another buyer if your offer is low especially in today's market. Visit my website http://www.westrealtynoco.com for more info on buying a home.
0 votes
Mitchell Fel…, Agent, Brooklyn, NY
Thu Apr 4, 2013
Dear Crags:

Here is what most people do.... they look at a lot of homes (let's say about 50 or so) and while doing so they get a keen sense of where property values are at and how the market is doing. They learn to know a good deal when they see one. When they see a good deal that also happens to meet their needs to some extent, they make an offer. How much they offer is based on how good of a deal it is in the first place. If it is a great deal they may offer the full price or more. If the buyer's perception is that the price is too high, they will give lower offers.

It is always better to give an offer than to not give an offer, you never know what can happen. Just keep in mind that good deal go fast and usually sell at or close to the asking price. In the end you have to ask your self, how badly do I want this property and offer accordingly. Each property is different and so are all buyers and sellers, hence it is always case by case, there is no general rule of thumb for making offers, just go with your gut. If I can be of further assistance, please contact me direct. good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes
Ann Zemaitis, Agent, 10013, NY
Thu Apr 4, 2013
A comparative market analysis usually helps you determine the correct price for a home.
Choose three comparable homes (or have a qualified agent do the work for you) that have actually sold, and three on market for sale currently (if possible). Average the prices and a good starting point is 5% off that (room for negotiation). However, it's currently a seller's market, with high demand and low inventory just about everywhere so best of luck with that. If it's priced right it will go fast and bidding wars and competition seem par for the course currently is my experience. So, basic economics often rule (where reason should)-- good old supply and demand. Short supply and high demand = escalating pricing. Especially with very low interest rates.

Ann Zemaitis
Sr. Vice President
Rutenberg Realty
917-676-1950
azemaitis@CRRNYC.com
*The agent who rebates 10% of my commission back to my buyers or sellers!
0 votes
Anna M Brocco, Agent, Williston Park, NY
Thu Apr 4, 2013
What is your agent advising...in order to determine a fair offer review comps, recently sold similar properties in the immediate area, see what the data suggests and go from there...
0 votes
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