Congratulations! You've finally found the house you're looking for and you're ready to make a bid. Here comes the tricky part: how much should you bid? Sometimes the bidding process can be a complicated tightrope to traverse. Multiple offer situations, or cases in which more than one competing offer is placed on a home, can be challenging for a homebuyer, especially one new to the process. To guide you along the way, here are steps to make the right bid and land your dream house.
While a listing agent can offer advice and suggestions, all decisions about how offers will be presented—and dealt with—are made by the seller. Your agent likely has other buyer clients, some of whom may be interested in the same properties as you are, so ask how offers and counter-offers will be presented and negotiated.
Looking into comparable sales is also a great idea to judge what you should bid. Check out how much houses in the area are going for and go back as far as six months. Find houses that are very similar to the one you intend to purchase. How much did these listings sell for and how much over or under was the sale price? All of these factors can help you assess your own bid.
Talk to the neighbors about noise levels, crime rates, schools and construction in the area. They often know extremely useful information. Problems with the area are good reasons to reduce your offer or not bid.
What is the seller's situation? Find out all you can about the seller and why they are selling. Has the house been on the market for a while? If the seller has already moved or bid on another house, play those cards and bid low.
Ask your agent's opinion. If working with a buyer's agent is possible, consider it. A well-seasoned agent can provide you with great advice as to what your offer should be. Buyer's agents will spend time researching price negotiation and attempt to get better terms for you.
Add contingencies to your offer to protect your interests. Always require a home inspection and an appraisal when making a bid. This will detect any hidden and needed repair jobs and will also ensure the home is worth the bid you're placing. If you add contingencies, these conditions will have to be met before the deal is final. Let the seller know if you're preapproved. This will tell them that you're serious and can probably close the deal in a reasonable amount of time.