Though the media portrays the real estate market as doom and gloom, experienced buyers and agents know that if the property is priced right and in good condition it’s going to go fast and for top dollar. In many situations, multiple offers will be received and the seller will call for a highest and best from each buyer.
- Cash offer of $97,000, no appraisal contingency, a physical inspection, and 15 day close. Net offer of $87,000.
- Conventional loan offer of $100,000, appraisal contingency, physical and pest inspection, sale of current home contingency (not in escrow), indeterminable close date. Net offer of $90,000.
- FHA offer of $102,500, appraisal contingency, physical and pest inspection, 3% credit for buyers closing costs, and 45 day close. Net offer of $89,425.
- What do you feel comfortable offering? Multiple offer situations bring a high level of emotion and people tend to offer more than they would really like to pay. Set a bar that you’re not willing to go over so you don’t end up having buyer’s remorse months down the road.
- What are you able to pay? If you’re at the high end of your budget it might be best to stick with you original offer. If you go too high you might be out of your purchase power your loan will be denied.
- What is the market value of the property? If you’re getting a loan the property will need to appraise accordingly. Offer too high and get a low appraisal and you’ll be stuck with only a few options. You can pay the difference at closing, try to negotiate with the seller to get the price down (good luck with an REO or Short Sale), or back out and start looking for a new home. Have your agent run a CMA on the property to find out if your potential offer may be over the value of the home.