Get an education, move out, meet someone special, and buy a home together. Does this sound like anyone you know? Could it even sound like you? Even if this scenario isn’t exactly you, wanting to buy a home is a dream that many Americans have. And buying a home is also the biggest financial transaction you will probably ever make. So it makes sense that you would love to get the best deal on that purchase. But what is reasonable to offer below asking price?
Because you have a certain budget in mind doesn’t mean that a seller will agree to it. After all, they too want to get the best deal. Often, the market will indicate which one of you – the buyer or the seller – has the upper hand. These are known as a buyer’s market and a seller’s market respectively.
Buyer’s Market Versus a Seller’s Market – What are They?
It’s definition time!
What is Low Inventory?
Yet another definition!
In terms of the variables affecting the price of homes, you may hear the term low inventory. Anyone in the real estate and mortgage industry keeps an eye on this variable.
Low inventory: When there are not many homes available for sale in a certain region.
What is considered low inventory? Well, take a look at what is considered a healthy inventory – about a 4 to 6 month supply of homes. Less than that – you got low inventory.
Low inventory affects not just the price of homes, but how the market appears to buyers, sellers, and builders. And to go full circle – low inventory creates a seller’s market, and a high inventory creates a buyer’s market.
So low inventory affects the number of homes and their prices, right?
Yup. Low inventory can create a fluid market. When housing prices get too high, people move to more affordable areas. This helps to balance out the number of buyers and sellers, and can help right housing prices. Likewise, high inventory will attract buyers, which will help increase prices to a better price point.
Important: Other variables, like the job market or housing bubbles, will also affect housing prices regardless of inventory levels.
The question you may want to ask yourself is this: as a buyer, when can I offer below asking? And what is reasonable to offer below asking price?
What should you consider when offering over or under the asking price?
Simply, only you know what you can afford when it comes to an offer. If you are in a bidding war, have a maximum amount in mind and don’t go over – put your emotions in your back pocket.
But in a buyer’s market, what is reasonable to offer below asking price? First, look at the comparables. Is the house priced right for the area, street, and property? (Your real estate agent can help with this…)
Then, take a gander at how long that that particular home has been on the market? Is it fresh or stagnant? The longer it has been on the market, the lower you could make your offer. For a seller, a low offer may be better than no offer at all.
What is reasonable to offer below asking price? You can submit any offer you want. Your agent has to present your offer, in writing, to the seller. But you never know what your seller is thinking. They may accept, counter, or reject your offer altogether. Some people adhere to a rule of thumb – don’t go below 10% of the asking price. But if the house is overpriced, in need of some serious work, or has been languishing, you may want to go lower than 10%. Your real estate agent can help you find an appropriate price.
Shamrock is the Lender You Need
Real estate agent for houses, home inspector for the condition of the house and Shamrock for your financing. Whether you pay over, under, or just at asking, you need a trusted mortgage lender to help you transition from home wanter to home owner. Shamrock can show you the way to the right mortgage with the right terms. Give us a call and see what we can do for you.