Don't let a bidding war make you pay more than you should! Here are some things you should consider when you are choosing your competitive price:
1. Consider the comps:
Look at the prices of other comparable houses sold in the neighborhood. Don't overpay because you are setting yourself up to lose money when you sell.
2. Consider post closing expenses:
Does the home need repairs? If so, and the comparables were move in ready, subtract the repair cost from the potential property to get a more accurate value of what the home is worth. Even if the house doesn't need repairs, but you will have to buy other essentials to go in the house (refrigerator, stove, etc.), consider those purchases so that you don't go over budget and have no money to buy these things.
3. Don't lose sight of your own bottom line:
You probably decided how much you wanted to spend before you went house shopping, so make sure to stick to that number. The "winning" feeling is short lived, especially after you realize you "won" a house you really can't afford!
Also, make sure to base your bottom line on your own comfort levels. Don't make your maximum budget the amount the bank approved your for. Lots of time, your number is much more realistic!
4. Refuse to play games:
If there are multiple offers, make your first offer your highest and best offer, considering what you can afford and what the home is worth. If the seller comes back and asks everyone to increase their offer, don't! You might already have the highest bid, and you already offered your best price, so stay put!
5. Keep the appraisal in mind:
No matter what you offer or what the seller accepts, your lender won't lend more than what it's worth.
If you want to learn more, read this article!
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