How much they should offer is always the first question I hear from buyers when they’re ready to make an offer on a home in the Iowa City area.
Right up front I want to say that Realtors don’t set the price on homes on the market, neither do they tell buyers what to offer. What we do is provide guidance on market conditions and gauge buyer and seller motivation. From there buyers and sellers make their own decisions. We are the bearers of knowledge, not the decision makers.
Making an offer on a home in the Iowa City area is a two step process. The first step is to collect data on similar homes sold recently. This list should include homes sold, homes contingent or sale pending and active listings. Getting that data is one thing. Analyzing it and deciding how it helps or hinders the amount you have in your head to offer is another thing. And in my experience you will have an amount in your head that you want to offer Almost all buyers do. The question is, does the data support that offer price? To answer that question buyers really do need a Realtor who understands the Iowa City real estate market and is able to guide them on reading the data.
If there are a lot of similar homes on the market and home sales are slow in the neighborhood you’re looking at it could mean there is an opportunity to offer a lower price. It would be premature to decide how much to offer based solely on the data though. This is where the second part of the process comes in. Buyers need to look at the bigger picture and that means putting a seller’s hat on. This isn’t easy when you’re close to the transaction and is one of the reasons why you as a buyer should have a Buyer’s Agent. (The rules will change if you work with the listing agent. They won’t be able to offer the same kind of guidance).
Sellers will have a number in their head too and a good buyer’s agent will help you look at the bigger picture by looking at data AND motivation to sell. (Just because the buyer’s agent doesn’t know the seller personally doesn’t mean he or she won’t find things out that might be relevant to the transaction). How that’s done is really very different from transaction to transaction and not easy to quantify in a blog post. Let’s just say that this is the part of the buying process where the value of a good Realtor comes to light. Opening doors and showing homes is not the hard part. Knowing how to guide buyers to structure a good offer to purchase requires a higher level of expertise.
As you can see, figuring out how much to offer when you make an offer on a home is not an easy process. Unless you have A LOT of experience buying and selling homes in the Iowa City area I wouldn’t recommend trying it on your own. As hokey as it sounds, the right Realtor is the key to your success in a real estate transaction – Make sure you have a good one in your corner before you’re ready to make that offer!
The rules change a lot when you don’t have a buyer’s agent. It’s called all bets are off.
I agree. I wish buyers had a better understanding of Agency in general and then they’d know that having a buyer’s agent is really a huge benefit to them. I think it’s the way the process works. Sellers interview agents before they work with them. Lots of times buyers go with the agent in front of them when they see a house they like. The interview route wouldn’t be a bad plan for buyers too!