How Much Should I Offer?
It often happens that we have multiple offers on a single ho
me. It causes a dilemma for buyers and a situation in which they wonder: “How much should I offer?”
Multiple offers are fantastic for home sellers, if you are on the other side of the fence and you’re a home buyer, it can really be confusing. Often sellers price their home low as a key to get the most number of prospects in the door, get the most number of offers, and ultimately get a high price on their property so they can ride off to the sunset.
While I love this when I am representing the seller, it can cause emotional strife for a buyer. If you are a buyer who has been in the San Diego home market for awhile, you have probably seen a big difference in the trends here.
In 2007 we had roughly 22,000 properties in the San Diego real estate market. 22,000! I remember thinking that nothing was moving anywhere. We were at a stand still, buyers were waiting the market out, sitting on the fence, didn’t want to “lose money” by buying, etc. There is no doubt that being a realtor in San Diego then was really rough, I remember thinking that there were days that I couldn’t stop working just to make ends meet.
How many do we have on the market nowadays in San Diego? About 5,000. So we went from 22,000 active available properties to 5,000. (And here I offer a piece of advice: “Don’t listen to the news, they’re not in touch with what happens on a day to day basis in real estate.”)
So what does this mean? We are seeing multiple offers on properties that are priced right, sometimes 50-100K above right here in San Diego.
Now, to get back to the original question that all buyers ask, “How much should I offer?” Well, that goes back to the second question, which is “What offers do they have?” Real estate has some similarities with poker. It is a card game and the cards are stacked in the sellers’ favor for a multiple offer situation. The seller’s agent cannot ethically tell you what offers they have on the table, much like you do not reveal the cards you have on the table when playing a game of poker.
What can you learn from this? Home buying is very emotional. There are some people who will pay any number of money to have a property with a large lot, some who really want a location close to work, we have had some pick their property based on the closet space, some who base their home search on how many trees in the backyard, some who only want Spanish Colonial, or some who will not look at narrow kitchens. Everyone is different.
The bottom line is to choose what you want in a home, be very clear, if you are in a multiple offer situation and really want the house, look deeply into the numbers in the area and determine how much an extra 10K or 20K will impact your monthly payment. I have to be honest, sometimes you will have to come up in price on a multiple offer situation, if you will be very happy in the home and can see your life unfolding there, you will know that the additional $30.00/month will be worth it. After all, how much did you spend last week on eating out?
Know your card game, play your cards right, and full steam ahead on finding a place that you can see yourself living in, see yourself sitting at the kitchen table sipping coffee, entertaining friends, chatting on the phone on the couch, or spending a rainy day watching movies. This is the real focus and in the future it will make you happy. What is the price on that?
