Pricing your offer, how to think about it

Dear Homebuyer,

Some time ago, we wrote a piece about how the asking price listed for a home often doesn’t hold much value. In a market condition like today, where the seller has the most leverage, we wanted to highlight that instead of reflecting the home’s true value, the seller’s asking price is often intended to motivate the most eyeballs or buyers to see or consider the home.

When pricing your offer, you should consider the following:

  1. Don’t take the asking price to heart.
  2. Data goes a long way, but not all the way.
  3. Understand seller motivations and think about yours.

We will go into more details with these below.

Don’t take the asking price to heart.

Remember economics? Demand vs. supply? Knowing what the market (folks like yourself) have been willing to pay (demand) for a similar home in the last 6 months is most important. It’s a great indicator of how much interest there may be today and what types of homes are sought after. The lack or surplus of that type of home (supply) will also dictate this.

Pricing to the market is more important than pricing to the asking price. Sometimes the asking price is artificially low, so expect to offer above. On the contrary, sometimes the asking price is higher than what it’s worth. So — either way, we stick to understanding what the market has been willing to bear.

Data goes a long way, but not all the way.

Hopefully, this helps answer the question you might ask your Nuhom agent, “So what do you think this home is worth?” Right? Not quite yet…While a pricing analysis will help guide you early on price, there are two wrinkles. 1) Your price will also be dependent on your terms and dates. Price is one of three main factors that a seller considers when reviewing your offer. Terms and dates being the other two. 2) People value homes subjectively; your price will depend on how much you want this home and your budget. What may be super important to you may be less important to others.

Understand seller motivations and think about yours.

In parallel, you will want to heavily consider how much a particular home fits your needs and wants. While a pricing analysis may set a floor price and define what the market has been paying, if a home is a great fit for you, you may decide that it’s worth paying more for. You should remember there will only be one winning buyer. This is where subjectivity and your budget play a role.

Today’s market and being realistic.

In summary, a recipe for success on pricing when you’re interested in a home…

  1. Request a free home pricing analysis on any home you are interested in or which may be offer worthy to understand what the market has been willing to pay.
  2. Understand the seller’s motivations and what type of terms and dates you can offer.
  3. Think about your motivations. Does this home meet your needs and wants? Is it in your budget?
  4. Put your best foot forward!

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