8 Questions You Need to Ask Before Making an Offer on a Home
Finding that dream house is only the first step. If you want that home to be yours, you also need to impress the seller, out-best other buyers, and make a right-sized offer to get you there.
Are you considering making an offer on the house of your dreams? Make sure you ask these eight all-important questions before you do:
1. How’s the neighborhood?
Loving the house is important, but you also need to love the community, too. Does it offer easy access to work, grocery stores, and other amenities? Are there good schools? What about crime rates and traffic?
Make it a point to drive the neighborhood to get a feel for its driveability, access, and the people that live there. You could even stop and ask a few people out in their yards what they think of the community. Would they buy there again if given the chance? What were they surprised to learn after move-in? How do they like their neighbors?
2. Are there other bidders?
Were there others coming and going when you toured the property? Was there a recent open house? Ask your agent if there are other bids on the table (or if any are expected soon).
If there are other people interested in the house, you’ll need to prepare a competitive bid — possibly one more than asking price.
3. How many days has the house been on the market?
Look at the listing for the home. What does it say under “DOM” or “days on market”? This is how long the house has been listed and available for purchase.
Generally, the longer a home is on the market, the more wiggle room you have on price. It also may warrant a second look at the property. Why isn’t it selling? Is there something wrong with it you should know about? Your agent may have insights here.
4. How motivated is the seller?
The previous two questions will play in here. If there aren’t other bidders, there’s little competition in the market, and the house was listed a while ago, the sellers are probably pretty eager to offload the property and move on. When this is the case, they might be more willing to negotiate on price.
Additionally, if the seller has already moved into a new home, is closing on another, or is on a tight timeline due to a job relocation, they also might be more motivated to sell the home quickly — even if it means taking a hit on price. (Your agent may be able to find out some of this information from the seller’s agent, so ask them to dig around.)
5. Is there anything wrong with the home?
Make sure to get the seller’s disclosure before you make an offer (the listing agent should have it). This will break down any known issues with the home, as well as any recent upgrades or repairs the seller has done on the property.
You should also check into recent events in the area. Has there been flooding that could have compromised the foundation? Hail that might have damaged the roof? Ask around the neighborhood for insights.
6. What did the seller originally pay?
Your agent should be able to pull up what the seller paid for the home when they initially bought it. Since the seller is likely wanting to make a profit of the property, you can use this as a good gauge as to what they will and won’t accept, offer-wise.
7. What’s the home’s market value?
You also want to look at what other homes in the area to get a good handle on the property’s worth. What did recent sales in the neighborhood clock in at? Are home values climbing or falling in the area? Your offer should be in line with market values if you want the seller to seriously consider it.
8. Can I afford it?
Finally, once you have all this information on hand, it’s time for the big question: Can you afford to make an offer the seller will find attractive? Make sure you factor in upfront costs like your down payment, closing costs, inspection fee, moving expenses, and more, and also think long-term about your monthly and annual costs.
The Bottom Line
Don’t make an offer blindly. Before you submit a bid on a home (especially your dream one), do your research. Know the neighborhood, the market, the sellers, and your budget, and work with your agent and loan officer to make sure you’re putting in winning offer.
Need help gauging your budget? Ready to get Approved to Move™ for your mortgage loan? Get in touch with Embrace Home Loans today. We’re here to help.