Home Values - What to Offer
14th February 2008
I have only purchased two homes, but here are some steps that saved me money when figuring out a beginning offer number:
1. Go to your county appraiser/treasurer’s website and find out what the current owner paid. If you search hard enough, you will find public information showing what the home was worth when the last owner bought it.
2. Calculate a figure giving the previous owner a percentage each year. I used 5% for both homes. So, if the house was bought for $100,000 four years ago, I calculate a simple increase of 5% ($5,000 per year) for four years, or $20,000, and offer $120,000.
3. Double-check your work on a home value website. I like zillow.com because it has neighborhood demographics, too.
4. In a market like this, stick to your guns. Buyers win in this market! Try throwing out a low number, because they just might take it!
I enjoy purchasing a home, but I know I’m strange. What are some of the methods you use to save money when purchasing a home?
February 14th, 2008 at 10:06 am
All cash deal.
February 15th, 2008 at 8:41 am
Nice! I’m doing an all cash deal next time I buy. People can’t resist the money when it comes easy, even if it’s less than they would get by waiting a little longer.
February 17th, 2008 at 3:55 pm
#2 was a great idea, Don’t be limited by what they think they deserve!
February 19th, 2008 at 3:34 pm
I’m not so sure that I would consider an all-cash as much of a deciding factor. The seller is going to get all the money anyway from the buyer’s lender, so the only real advantages I can think of for the sellers are:
1) Quicker closing timeline
2) No worry of a buyer needing the approval of financing, which can be very relevant on a property that is being sold as a “fixer upper”
Am I missing something else? I’d like to hear more benefits. As a seller, why would I discount my price based on where the money is coming from as long as it comes?
February 20th, 2008 at 6:25 am
@RacerX - #2 is my favorite method. My husband thinks it’s too low and “offensive” to the seller to offer less than he asks, but I don’t care. I’ve saved tens of thousands of dollars by “lowballing” the seller.
@Ralph - I’m not really sure except I just know that if I say I have cash, they come running. You’re right about the earlier closing date and financing approval, although these days, a buyer should have financing set up before coming to the bid table. Do people not do that beforehand?
February 20th, 2008 at 9:20 am
@Brooke - We just recently sold our previous home and only 1 buyer out of the 4 who made offers was preapproved. Prior to selling the home, I had assumed everyone or almost everyone who made an offer would be preapproved. Some real estate agents/companies are requiring the preapproval before they will work with buyers on finding a home, but not all of them.
Maybe it boils down to a peace of mind issue. If the seller knows that a buyer has the cash to pay for home, maybe there’s a sense of comfort that goes along with it. I don’t know.
One interesting side note though is the one of the offers we received was from someone who intended to pay cash for our house, but the offer was so ridiculously low that we just countered and moved on. We didn’t hear from the guy again. Those kind of lowball offers are typical for where we were in Florida though.
February 27th, 2008 at 8:08 am
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February 29th, 2008 at 9:47 pm
If you have a MIDDLE EASTERN sounding name, please save yourself the hassle and don’t buy a home with cash. Especially if you hate banks and have all your money at home in a large shoe box, or if you are financing terrorism with laundered funds.