When making an offer on a property, it's natural to be nervous. You certainly don’t want to make a mistake. You may feel like all your friends and family are going to evaluate and judge your decision and have an opinion on whether you paid too much or too little.
You certainly don’t want to come out of it looking stupid. At the same time you do not want to miss out on the home you have just fallen in love with. As a result, you go through the internal battle of deciding exactly how much you are prepared to offer.
It is one of the most stressful events you will ever experience in your life.
The Home Buyers Constant Internal War:
The fear of missing out vs. the fear of paying too much.
When you end up in a competitive offer situation, the stress ends up being amplified as you now have a deadline to decide by and worse still - someone else is trying to take your dream home away from you (often multiple people).
At this point it is common for buyers to make a big rookie mistake and come in with an offer price just below a round figure eg. $399k (or $349k / $299k etc). Why is this kind of number chosen? This is the point of compromise at the end of the internal battle:
“I really want this house. Ideally, I would like to pay $995k for it. I think it’s worth $1.05m absolute screaming tops though. I really wouldn’t pay more than $1m for it, so I'm going to offer $995k. If someone else wants to pay more, they can have it. Good luck to them. ”
Sound familiar?
In this scenario, you have to see the $995k number for what it is - a psychological barrier, over which you don’t feel comfortable.
The problem is that this works the opposite way for a seller. An offer at $1m looks so much more attractive than an offer at $995k. You can make your offer 10x more appealing with what is, in the scheme of things, a very small change.
If a home is worth $995k then it is worth $1m. That's only an increase of 0.05%.
If you can build up the stomach to make offers slightly over the round figure limit in your head, you will instantly distance yourself from most of your competition and dramatically increase the chances of having your offer accepted.
This works even if you are lucky enough to be the only one making an offer.
Note: The same principle applies for any round figure, like $850k (eg. offer $851k instead of $849k)
Bonus Tip: To make your offer look even more appealing, write down $849k then cross it out and write $851k and initial the change.
Why $851k instead of $850k? An even number looks like it has been plucked out of thin air and makes a seller think you must have more money. An uneven number shows that you are really pulling out all the stops to buy this home, you have seriously considered your offer price and you are putting in that little bit extra to show you really want it.
This looks great on paper and shows the seller you have pushed yourself out of your comfort zone.
We are here to guide you and while we are working for the seller, we also have a duty of care and best practice rules we follow for buyers too. Please be assured that we have all parties best interests at heart.
We can help by providing recent comparabale sales which really is the best way to guage a property's value.
Call us anytime!
