Negotitating your first home purchase

Every time I help someone find a home, especially first time home buyers, I am asked, “What should we offer?”  There are several things to look at in conjunction to that question to help you determine what it is you “should” offer.

1) Even now you are still supposed to “offer” something.  Now keep in mind I am speaking about my market, San Antonio, TX.  There are many areas slower than mine, and some that are much busier.  You waste a lot of time with low-ball offers in West Texas where there are no homes for sale, and at the end of the day all you will have accomplished is wasted time!  In San Antonio you are expected to make an offer below the asking price.  Sellers assume you will.  So just know that you aren’t going to upset anyone when you walk in and don’t cut a check for the full amount.

2) The house doesn’t dictate what you offer, YOU dictate what you offer!  Obviously I think you should look at homes with a Realtor who can pull recent sold homes in the area to help you determine the value of the homes compared to ones that have recently sold.  That being said when looking at what to offer you need to really take a good look at how you would feel if you lost the home to another buyer.  Sometimes we caught up in negotiating and the deal can fall apart over silly things.  People’s pride get in the way of them accomplishing their goal to buy/sell a house!  What I think you should do is sit back and think about losing the house.  Would you feel heart broken, or would it be a relief, or do you even care?  Clearly you can see the difference that would make on what to offer. 

3) Do you want to know what I would offer, or do you want to know what I think you should offer?  This plays into number 2 to some extent.  I don’t have any emotional attachment to most houses.  I have been buying and selling properties for awhile and I look at them differently.  Is it something I could sell in two years and make money?  Does it cash flow if I rent it out?  Will my wife kill me if I blow the deal by negotiating it to death?  Those are questions I ask!  Now I always like to start low because someone’s situation will dictate why they are selling and how much they can afford to give up.  But keep in mind what I said about my wife killing me if I blow it!  If it is a house I know we will buy then I don’t squabble over a couple grand, I BUY THE HOUSE!  A couple grand a few months from now won’t even matter! 
If you want to know what I think you should offer I will give you my opinion, but I will rely much more on comparative sales and try to give you the best picture of what is going on in that market.  I like to break it down into; you might be overpaying but it may be worth it, I think they have it priced at market level, or if you get it at X I think you are really getting a great deal.  Then you can decide.  Remember, I go home to a house when we are done and you may be going back to your parents or an apartment etc.

4) Try to know your plan.  I say “try” because I can’t tell you how many times I’ve heard people say they are never moving after this house.  Then they move within 3 years!  Be realistic.  Are you just married?  Do you plan on having kids?  Think through your lifestyle and make a plan. 

5) What if you HAVE to sell?  This is a question not many people ask, but they should!  Are you very dependent on your job? If so could you get the same income if you had to leave and go to another company?  How is your marriage behind closed doors (and I don’t mean in the bedroom, I mean when noone else is looking)?  If you know you have a rocky relationship don’t try to make it stronger by buying a house together!  If you do, make sure you have a plan if you need to get out.  I know this sounds harsh, but too many people live in a fantasy land that ends up with them dumping the house below market or getting foreclosed on!

Those are some tips to help you determine what to offer.  Obviously the big one is whether you will have a broken heart if you lose out on a house.  I hate seeing that happen to anyone! 

If you are looking to buy a home in the San Antonio area, please contact me I’d love to help!

Chris Cowley

www.ChrisCowley.com

210-389-6006