This Post by Pat Kennedy in the D.C. area is pretty much a universal. I like her writing style and I think it is just as relevant to our Tampa market.
Q: Dear Pat, we found a house we like and are trying to figure out how much to offer. Can you help? Fuzzy in Fairfax
A: Dear Fuzzy, there are no hard and fast rules about making offers - except for one. You should sit down with your buyer broker and go over the sales history for the area around the house you want to buy.
Sometimes you can negotiate with the sellers and get them to lower their price or maybe give you more favorable terms. But sometimes you can't.
Here are some questions you need answers to:
How long has this home been on the market? If it's just come on, the sellers probably won't be as flexible as they will be after it's been around for a few weeks. And after a few months they'll probably be really glad to see you.
Are there any other offers on this house? If you are the only offer on the table, you are in a much stronger bargaining position than if there are other buyers bidding for the same place. And if you really like a place, I recommend acting quickly. Often, ya snooze, ya loose!
What have neighbor's homes sold for recently? Your buyer broker can give you a print out of the recent sales and go over them. Compare the other homes to the one you are thinking about. Compare the size, location, the amenities and overall condition of each home. This will give you a sinse of the values.
Should we offer much less than we are willing to pay? You're strategy will depend on whether or not it's a hot property. If it's new on the market with lots of interest, go in with your best offer. If it's been around for ages and you're the only buyer on the horizon, then you might have a little more wiggle room. Also, if the "comparable" homes indicate your dream house is overpriced, use that as a determining factor. If, on the other hand, it's priced at or below the other sales, you might want to just pay them their price.
Also, it depends on how much you want the house. If it's really the perfect place, how would you feel if, while you were going back and forth with the sellers, other buyers swooped in with a great offer and got your house for just a few thousand more than your last offer. If, on the other hand, there are lots of houses you like and you won't be heartbroken if you don't get this particular one, then you might be a little more aggressive with your offer.
Developing a negotiating strategy is something you'll need help with. This is where a skilled, experienced buyer broker can earn her keep.