Whether you’re getting ready to buy a personal residence or investment property, there are important questions you should ask yourself and research before deciding on what your offering price will be. Just as the seller must do their homework and set the asking price at a justifiable number, you must do the same to justify your offering price.
The Actual Condition of the Home Will Reflect Your Offering Price
Is the home you are looking at truly ready for you to move in, and are the essential features of the home in long-term working order? A seller may set their price without regard to a 20 year old furnace, but you can’t afford to make the same assumption. If the furnace will need replacing in the short-term, this should be factored into your offering price. Condition of roof and foundation are also critical features that should be evaluated against the price you will offer. If your offer comes in less than the asking price, you will be ready to justify your offer based on an objective evaluation of the essential features.
How Much House Can You Actually Purchase
Before you make any offers, a lender must let you know how much you can borrow. Not necessarily the maximum amount you can qualify for if you sold all your cars, cancelled the cable TV subscription, turned in your smart phone and mowed the lawn with hand mower. The amount you should borrow so your life style can remain reasonable and you can meet all your financial obligations. In times past it was the practice of many to borrower as much as possible because the home would appreciate and your could count on getting regular raises at your career job. Those ‘sure things’ of the past no longer exist for everyone, and you must ease the burden as much as possible so you remain solvent and ready for unexpected expenses.
Are You Willing to Pay An Emotional Price?
Do you want the house so bad that the value of the comparables don’t matter, and you don’t care if your offer makes the house the most expensive in the neighborhood? Are you so attached to the home, its layout and features that you will pay more than the asking price, especially if you are in a competitive bidding situation with other would be buyers? You should decide beforehand if you want the place so bad that you will throw caution to the wind. It’s not a sin to want something so bad you’re willing to pay for it, but you should know beforehand is this will be your offering stance.
The Offering Price Depends on the Location
They say that location is everything, which it may or may not be, but it certainly is something. A home may be located in a good place, but at the same time may be inconvenient to places you regularly go (like work). A great neighborhood can be geographically inconvenient; costing you time and money once you emerge from the confines of the great neighborhood. When thinking about location consider how long your commute to work will be, how close is the Walmart, can you get gas fairly close, is your bank located within a reasonable distance, and what about places you must taxi your kids on a daily basis. You may want to live out in the country but will spend all your time taking kids to and from school, soccer, swimming, friends houses, etc. These are all offering price considerations.
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