Buying a home is an exciting journey, but knowing what to offer can be a tricky decision. Should you start with a lowball offer and negotiate, or should you come in strong to secure the deal? Let’s break down everything you need to know about making a smart first offer on a property.
Understanding the Market
Before making a first offer, it’s crucial to understand three key aspects:
- The local real estate market
- The property itself
- Your financial situation
Buyer’s vs. Seller’s Market
Real estate markets vary, and your strategy should be adjusted accordingly:
- Buyer’s Market: Homes are sitting on the market longer, meaning sellers are more open to negotiation. In this case, offering 5% to 10% below asking price is a common strategy.
- Balanced Market: Supply and demand are relatively equal, so a first offer of 1% to 5% below asking price is reasonable.
- Seller’s Market: If homes are selling quickly with multiple offers, you’ll need to be competitive. Your first offer may need to be at or even above asking price to stand out.
Researching the Property
To make an informed offer, you need to analyze the property’s history and condition:
- How long has it been on the market? Properties that have been listed for a long time may indicate room for negotiation.
- Has the price been reduced? If so, it could mean the seller is motivated.
- Does it need repairs? If significant repairs are required, you can justify offering less to accommodate the costs.
- Comparable Sales (Comps): Reviewing recently sold homes in the area helps you determine if the asking price is fair. Tools like Oambase, our property analysis SaaS, can assist with this data.
Your Financial Readiness
Before making an offer, ensure you’re financially prepared:
- Get Pre-Approved: Knowing how much you can afford prevents you from making unrealistic offers.
- Set a Budget: Stick to a price you’re comfortable with, even if you fall in love with the house.
Strategies for Your First Offer
Once you’ve done your research, it’s time to craft your offer based on the market conditions:
- Buyer’s Market – Offer 5% to 10% below asking price
- Balanced Market – Offer 1% to 5% below asking price
- Hot Seller’s Market – Offer at or above asking price to stay competitive
Your offer isn’t just about price—consider including:
- A strong pre-approval letter to show you’re serious.
- A competitive earnest money deposit to demonstrate commitment.
- Flexible closing dates to appeal to the seller’s timeline.
Negotiation Tips
Once your first offer is submitted, negotiations often follow. Here are some key tips:
- Leave room for negotiation – Don’t start at your absolute highest price.
- Stay respectful and professional – Keep emotions in check.
- Be willing to walk away – The best deals happen when you’re not desperate.
Making the right first offer is both an art and a science. If you do your research, set realistic expectations, and work with a knowledgeable real estate agent, you increase your chances of securing the best deal.
Are you currently house hunting? Let us know your experience in the comments! If you found this guide helpful, don’t forget to like and subscribe for more real estate insights.
