Sunday, May 6, 2007

The Right Offer


I specialize in working with first time home buyers, and amongst the various parts of the process making a bid fora home, one of the stickiest is making the right offer. There are two major parts to an offer. One is the conditions of the contract, and the other is the amount of the bid. These two parts work together to form a successful bid, but the heaviest burden lies with the amount of the offer. That is the part I am going to discuss in my entry today.
For the first time in many years in Berkeley and the surrounding areas, the buyer is seeing situations in which they are either the only person making an offer on the home, or the buyer is making an offer on a home that has been on the market for awhile, and , again, they are the only people making an offer. The strategy in this case is to make an offer low enough to prompt a counter offer from the sellers, but not so low that it is rejected out right. This stratagy should get you the property at the lowest offer the seller will accept. This will be different with each home, and it will take some knowledge of the state of the market, the inventory of homes, and the ability to recognize the real value of a home apart from it's list price.
If the buyer is making an offer on a home, and they are in competition with other buyers, a different stragy is called for.
I have seen it time and again, when there is competition for a home, there will be one or two low offers, a majority of offers bunched up around a single price, and one, maybe two offers that rise above the others.
If you truly want a home and there is going to be competition for that home, you must be able to determine where that price is around which most of the other buyers will bunch up , and come in with an offer above that.
In most cases, that number is going to be obvious.
When in competition, I want my buyers to reach a bid price where they are happy if they get the home, and they are happy if they do not, because they would not have paid over that price for the property.
Both these stratgies for making an offer in 2 different situations do take a good understanding of the market, and a good understanding of your own motivations and desires.