Bidding – Do Your Homework Before Making an Offer
Many people describe house shopping as an emotional roller coaster, and for good reason. Whether you are looking for a modest starter home or a place to spend your golden years, there are a lot of things riding on your decision. Will you like the neighbors? Does the community offer good schools and convenient shopping? Will you get your money back (and then some) if you decide to sell down the road?
Ultimately, though, where you make your home has a tremendous impact on your overall happiness. This is why it is important to really do your homework before making an offer on a house.
Five tips as a guide when preparing to bid
1. Get your financial ducks in a row.
These days, most sellers will not consider an offer unless the buyer is prequalified for a mortgage. In some cases, sellers prefer to deal with buyers who have gone one step further and obtained a preapproval letter locking in specific lending terms. If you submit a bid without financing in place, you could easily lose out to a more qualified buyer – even though your offer might be higher.
2. Research the schools.
Sometimes, couples without children ignore school district rankings because they believe school quality does not affect them. In reality, schools are directly tied to property values. If you plan on selling in the future, your community’s schools can make or break your sale price.
3. Consult with an agent.
Although the Internet makes home shopping easier than ever before, buying a home involves a great deal of money. For most people, it is the single most significant purchase they will ever make. For this reason, it is smart to take advantage of the in-depth knowledge and experience that a real estate agent brings to the table. This is especially true if you are shopping in an unfamiliar area. Agents typically live in the communities they serve. Your agent can point you toward housing stock that fits your lifestyle.
4. Research neighboring home sales.
Your offer should be based on much more than the seller’s asking price. Borrow a technique from real estate agents by researching recent home sales in the area. Over time, homes in a specific community tend to sell within a specific price range. Compare your target property to similar houses in the area. For example, if you are looking at a four-bedroom colonial, you can’t compare it to a two-bedroom condominium. Line up recent sales of comparable properties to determine an accurate opening bid.
5. Check for red flags with the home’s condition.
Although most states require sellers to disclose any known defects or damage in advance, residential property disclosures do not always tell a home’s full story. When you tour a property, look for signs of damage or needed repairs. If you spot potential problems areas, such as leaky faucets or damaged walls, do not be afraid to speak up. If the sellers truly want to make a sale, they will conduct requested repairs and remedy defects. Keep in mind, however, that some issues are impossible to spot with a visual inspection. To protect yourself, simply ask the sellers if they are aware of any known defects or damage.