The Opening Bid
There is no magic formula for picking the price of your offer. There are situations where half of the asking price is too much to pay, and others where offering even MORE than the asking price is the advisable thing to do. In the first case the Seller is just
plain asking too much for the property. In the second case the property
is priced very reasonably and you are
competing with other prospective buyers for the right to purchase. Most often your situation will fall somewhere between these scenarios, but each time you offer, you should make a fresh assessment of the market and property in question.
Before making an offer, decide how much is the top price you are willing to pay for that 'property. Do this in advance so that you won't end up getting swept up in negotiations and overpaying. To make this decision, take a look at the asking prices for similar properties in the area. Then see what you can learn about the most recent actual sales prices of similar properties. If the market is "going up", you will most likely end up paying a little more than the last similar sale. If the market is "going down" you may end up paying a little less. Properties may be worth more to some people that others. For instance, I will probably be willing to pay more for the lot next door to my house than anybody else will, as it benefits me the most to own it.
In my opinion, the "Best Deal" is the one where both Seller and Buyer are more or less happy with the price and terms of the contract. Try to remember that real estate is not war. It is entirely possible for BOTH parties to "win". Keep in mind that you and the Seller have a goal in common- you both want money and titles to change hands!
So how much DO you offer?
Generally speaking, the larger the
down payment, the lower the price.
Keep that in consideration while following the suggestions that follow.
For a property that is sensibly priced,
an opening offer within 10- 15% of the
asking price is probably a reasonable
place to start. If you think that the asking price is "high", make an offer
within 10% of the top price that you
are willing to pay. Remember that the
Seller may have quoted a fixed price
and you may end up paying just what
was asked. That's OK if the property
is worth it. Don't try to employ too much psychology here - offer what you want to, pay what you want to, and don't get mad if the Seller won't sell.
Remember .... it's just real estate. My first "boss" in the business used to say "Nobody ever died from real estate." Don't get so stressed out that you become the first to do so.
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