How to Know What to Offer on a House

Buying a house is a significant financial commitment. Crafting an informed offer requires careful consideration to balance financial prudence with successfully acquiring the desired property. A well-researched offer can position a buyer advantageously, potentially saving thousands of dollars while demonstrating serious intent to a seller.

Researching Comparable Properties

Establishing a baseline value for a target property begins with analyzing comparable sales, or “comps.” These are properties that recently sold and share characteristics similar to the home you intend to purchase. Effective comparables include homes sold within the last three to six months that are similar in size, age, number of bedrooms and bathrooms, lot size, general location, and other significant features.

Public records, such as county property appraiser websites or city register information systems, often provide details on past sales, property taxes, and deed transfers. Real estate agents, who access the Multiple Listing Service (MLS), possess comprehensive, up-to-date data, including listings, photos, prices, and status updates. Reputable online real estate platforms also display some MLS data, though it might be limited or delayed compared to agent access.

Analyze the price per square foot, the final sale price relative to the original asking price, and how quickly these homes sold. Identifying outliers, properties that sold for unusually high or low amounts, can help refine your understanding of the market. These extreme sales might have unique circumstances that do not apply to your target property. This analytical process provides an objective starting point for determining a property’s market value.

Adjustments are necessary when comparing properties that are not perfectly identical. For instance, a comparable home with an extra bathroom or a recent kitchen renovation would command a higher price. Conversely, a comparable property with a larger lot or a more desirable view might justify a higher value. These systematic adjustments help in arriving at a more precise estimated value for the specific home you are considering.

Assessing the Property’s Unique Aspects

Beyond market value from comparable properties, a home’s unique attributes require assessment. The property’s condition plays a significant role, as necessary repairs, upgrades, or renovations can affect its value. An outdated HVAC system might need replacement, ranging from $3,000 to $7,000 or more. Major roof replacement can cost between $5,000 and $10,000 or higher, while smaller repairs like plumbing issues might cost $150 to $600.

Features that distinguish a property, positive or negative, also influence its value. High-end finishes, a swimming pool, an unusually large lot, or a desirable view can increase a property’s appeal and value. Conversely, drawbacks like an inefficient layout, outdated systems, or close proximity to a busy road can reduce its market appeal.

Professional inspections uncover potential hidden issues that could influence your offer. A general home inspection lasts two to four hours and covers systems like plumbing, electrical, roofing, and the foundation. Specialized inspections for pests, radon, or sewer lines can identify specific concerns. The inspection contingency period, often seven to fourteen days, provides time to review reports and decide on a course of action.

Should inspections reveal significant issues, these findings can become points for negotiation. Buyers might request the seller to undertake repairs, offer a credit towards closing costs, or reduce the purchase price. For example, if a home inspection uncovers structural issues requiring $10,000 to $20,000 in repairs, the buyer can use this information to adjust their offer or request the seller to address the problem. Understanding these unique aspects allows for a more tailored and accurate offer.

Understanding Local Market Conditions

Local market dynamics shape the approach to formulating a home offer. Identifying whether the area is experiencing a buyer’s, seller’s, or balanced market provides insight into negotiation leverage. In a buyer’s market, more housing supply than demand gives buyers more options and negotiation power. Conversely, a seller’s market features more demand than available homes, allowing sellers to command higher prices and receive competitive offers.

The average days on market (DOM) for similar homes indicates how quickly properties are selling. A national average DOM was 51 days in May 2025, but this varies widely by location. Homes selling quickly, in less than 30 days, suggest a seller’s market. Properties lingering for 90 days or longer might indicate a buyer’s market. Recent price trends, such as whether prices are rising, falling, or remaining stable, also reflect market momentum.

The inventory of available homes, expressed as months of supply, provides a clear picture. A balanced market has about five to six months of housing supply. An inventory above seven months suggests a buyer’s market, while anything below five months indicates a seller’s market.

These conditions influence the aggressiveness or conservatism of an offer. In a strong seller’s market, a buyer might need to make a more competitive offer, potentially at or above the asking price, with fewer contingencies. In a buyer’s market, there is more room to negotiate on price and terms. General economic factors, such as interest rates, also play a role; rising rates can affect affordability and reduce buyer demand, potentially cooling the market.

Developing Your Offer Strategy

Formulating a strategic offer synthesizes information from comparable properties, the home’s unique aspects, and local market conditions. The initial step involves determining an offer price range that reflects the property’s estimated value, factoring in adjustments for condition or unique features, and considering market competitiveness.

Contingencies, conditions that must be met for the sale to proceed, protect the buyer. Common contingencies include financing, inspection, appraisal, and home sale. A financing contingency, lasting 30 to 60 days, allows the buyer to withdraw from the contract if they cannot secure a mortgage. An inspection contingency, usually 7 to 10 days, permits the buyer to address issues found during the home inspection.

The earnest money deposit demonstrates a buyer’s commitment. This “good faith” payment, typically 1% to 3% of the purchase price, is held in an escrow account until closing and applied toward the down payment or closing costs. In competitive markets, a higher earnest money deposit, sometimes up to 10%, can make an offer more attractive to sellers. The desired closing date is another negotiable term, with some sellers preferring a quicker close while others need more time.

Potential seller concessions can be integrated into the offer. These are costs the seller agrees to pay on behalf of the buyer, including a portion of closing costs, a home warranty, or credits for repairs identified during inspection. Limits on seller concessions vary by loan type, with conventional loans typically allowing 3% to 6% of the home’s purchase price. Crafting an offer that aligns with a seller’s likely motivations, such as a desire for a quick sale, a specific closing timeline, or a clean offer with minimal contingencies, can enhance its appeal and increase the likelihood of acceptance.