Open Listings Homebuying Guide

Buying a home is easy when you understand each step of the process. We're compiling everything you need to know and defining all the confusing terminology to put you in control.

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How much should I offer?

If your offer is too low, it might not merit consideration and may even insult the seller; if it’s too high, you might overpay.

Making an offer on a house you want to buy is like walking a tightrope without a safety net. If your offer is too low, it won’t merit consideration and may even insult the seller; if it’s too high, you will outshine other potential buyers, but you may also be incurring more debt than you can handle. Even if you’re approved for a higher amount, stick to your budget when making an offer. With a few pointers and a bit of research, you can think like a real estate expert and nail down the magic number that gets your offer accepted.

Using comps to price a home
The best way to create a price estimate for a home is to look at recent, similar, nearby home sales. These are called comps (short for comparable sales) and they are used by appraisers and automated valuation models alike. By selecting the most similar comps and comparing their sold price per sqft, you can create a price estimate that's backed by real data.

FYI - The Open Listings comps tool makes it simple to price any listing

First, look at factors surrounding the listing, including how long it’s been on the market in relation to other similar homes. If the listing has been around for a long time, there are likely few competing buyers, unless it has recently had a significant price reduction. Find out the average sale price of similar homes in the area, and whether they close at asking price or above. There is a formula, called the List Price-to-Sale Price or "LP:SP" ratio, which establishes the neighborhood’s rate of selling above or below asking price. The lower the LP:SP ratio, the better your chances of walking away with the keys.

To see what impact an increase in your offer will have on your monthly payments, run the numbers through an online mortgage calculator. On a typical 30-year mortgage for a $500,000 house financed at 3.9%, if you increase your offer by $10,000 it adds only $48 a month to your mortgage payment. In a healthy budget, a mortgage payment should not consume more than 28% of the homeowner’s gross income.

Your first offer should be your best offer, and high enough to include you in the round of counter-offers. If you have your heart set on a property, do not submit a lowball offer that is sure to be outbid by another buyer. Submit the highest bid you can comfortably afford.

Make an offer with Open Listings.

How much should I offer?

If your offer is too low, it might not merit consideration and may even insult the seller; if it’s too high, you might overpay.