Making an offer - what you should know

Falling in love with a home, and coming to the realisation that this is where you want to put down your roots and make special memories is an exciting moment; however, there are many important aspects that need to be taken into consideration before making an offer that will essentially bind you to the property.

Below are a few tips that will aid you in taking the next step towards becoming a home-owner.

According to Richard Gray, CEO of Harcourts Real Estate South Africa, “Understanding the market as it is at present should play an important role when determining the value of the offer that will be presented to the seller. Establishing whether it is a buyer’s or a seller’s market is key.”

He continues, “Buyer’s need to remember that in a buyer’s market, sellers will be more open to offers as there are fewer buyers and therefore less competition, and sellers may be more willing to accept low offers rather than miss the opportunity for a sale. In a seller’s market, the buyer may not be able to get away with an offer that is below the asking price as the seller may have already received a number of offers and will settle with the one that is the most attractive and lucrative.”

It is always a good idea to find out exactly why the seller wants to sell the property. Should the reasons for the sale be as a result of negative qualities or aspects of the property, this could influence the offer that is put forward. It may not be easy to find out this information as the listing agent and seller may not want to disclose the reasons behind the sale.

It is also important to find out the home’s history and for how long it has been on the market. If a home has been on the market for a lengthy period, the seller may be willing to accept a low offer. In some cases, a listing may expire and then be resubmitted. Therefore, it would be in your best interest to check if it has expired and been re-listed before putting in an offer.  

When a property has been owned for a long period of time, the price that the seller originally paid for it is of little significance to the potential buyer. However, if the property has been purchased in recent years, the offer that is put forward to the seller could be relatively close to the original purchase price, therefore it is recommend that the buyer makes enquiries into the price. Although the price may be of similar value, it would need to take into account appreciation value and any remodeling improvements since the time of purchase in order for the offer to be of the appropriate value.
“Remember to do your homework. Compare the recent sales of property that are in the same area as the desired property, have the same configuration and are of similar size in order to get an idea of  the average price range that they were purchased for before putting in an offer” advises Gray.

Gray concludes, “Ask your agent for a current trend report and compare the prices that homes were listed verse the prices that that were actually sold. If the majority of the listings are selling below their listed price, it may be a strong indication that the seller will accept a lower offer than the initial asking price. It is all about accurately judging the situation and making an informed offer that the seller will not be able to refuse.”

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