Many factors affect how much to bid on house
Q: I’m making an offer on a house and there are a number of other people making offers as well. I’m not sure what I should do. Should I offer the asking price? Should I go above that? Will I have a chance to improve my bid later?
A: As we get into a market which is more competitive than it has been in a many years, you’ll start to face situations like this more often. In a multiple-offer situation, someone (or a couple of people) are going to walk away disappointed. In order to try and keep that from being you, there are a few things you need to ask yourself.
First, what do you think the house is worth? Your Realtor should pull the most recent sales in the area so you can get a sense of the value and to make sure your office is likely to pass an appraisal should you need and/ or decide to get one. Most people don’t want to grossly over pay for a house.
Second, how much can you afford to offer? This is probably the most important question. Let’s say the house is priced fairly and there is room to bid above the asking price without risking a low appraisal. Now you have to decide what you’re willing and able to pay for it. Unless the listing broker has direct permission, they are not likely to tell you what the other people are offering. So, you’ll just have to make the best offer you can. There’s no way to know if the seller will ask for everyone’s “highest and best” offers after they receive the initial round of offers. Sometimes they just want to take the best offer they receive and move forward.
Third, what else can you put into the offer to make it more advantageous to the seller? There are lots of ways to make an offer more desirable besides the purchase price: You can offer to pay for inspections, appraisal, survey (things for which the seller often pays) among some other fees. You can try to offer as quick a closing as possible. There are many other things you can do to sweeten the offer. Talk to your Realtor about the options and specifics of the house.
Finally, good luck! It’s exciting you found something you like so much. But if you don’t get it, know there is another house out there which will work for you.