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How Much to Offer on a House: Should You Go Below or Above Asking Price? By

How much should you offer on a house? The not-so-simple answer: It depends on the market you’re in, the list price, what kind of mortgage you, as the potential home buyer, are comfortable with, and many other factors that you should weigh before beginning negotiations.

Of course, every buyer wants to score a deal. It can feel good to negotiate a seller’s price down, and even a small price cut can make a big difference to those monthly mortgage payments.

But, if you go in with a lowball offer, you could risk offending the sellers—and having them write you off completely. Buying real estate is all about striking the right balance. Here are some questions to ask yourself to help you figure out that happy medium, and to help you land on the perfect offer price.

Are you in a buyer’s or seller’s market?

“Your ability to present a lower offer will depend greatly on current market conditions—meaning if it’s a buyer’s or seller’s market,” suggests Cynthia Jacinta Keskinkaya, co-founder of the Keskinkaya Dartley Team at Douglas Elliman in New York City.

So before you make any purchase offer, determine what type of market you’re in. Traditionally, buyer’s markets come with a lot of flexibility on price, because available inventory is high and houses tend to sit on the market for longer. Here, sellers tend to be more willing to negotiate, because offers are few and far between.

“In a buyer’s market, I would not hesitate to submit an offer that’s around 10% below asking,” advises Chris Cloud of EXIT Heritage Realty in Haymarket, VA. “Most sellers will at least see that as worthy of a counteroffer.”

In a seller’s market, it’s much harder to go below asking price, because inventory is low, and multiple buyers tend to be interested in the same properties. In this case, the sellers may be getting multiple offers, so don’t expect them to be too willing to negotiate with you. If you’re determined to make this house your new home, it’s best to offer list price, or better yet, consider going above the listing price if you can.

Know that other home buyers might be willing to submit an all-cash purchase offer, or even waive a home inspection, to persuade the sellers to accept their offer, so prepare to get competitive.

Before you start submitting offers, your real estate agent can help you determine which market you’re currently in. Alternatively, here’s more advice on how to tell whether you’re in a buyer’s or seller’s market.

How long has the listing been active? 

“By paying attention to the property history, you can get a better idea of the demand for that house,” notes Jennifer Carlson of Coldwell Banker in East Greenwich, RI.

“Two days on the market? Probably not a good idea to go in with a lowball offer $50,000 below asking price. A whole year on the market, with price reductions? Go ahead and roll the dice. The longer a house has been on the market, the less of an upper hand the seller has in negotiation.”

If the house has been on the market for a long time, the owner is probably motivated to sell as soon as possible, and that can mean flexibility on price. In the worst case, if you come in with an offer that’s too low, the seller might come back with a counteroffer that’s still reasonable.

However, Michael Russell of Ratchet Straps USA also emphasizes the importance of making sure a lowball offer doesn’t insult the seller, if you want it to be taken seriously as a buyer.

“The rule I’ve always followed is to never go more than 25% below the listed price,” he says. “Chances are, after fees, commission, and sentimental value, the sellers are already hurting. If you dip below that point, they may disregard your offer entirely.”

Fortunately, info on how long a house has been on the market can be easily found on most listings—or if not, any good real estate agent will have access to this information through the multiple listing service. Ask for this to be pulled up for you, and use it as a reference as you draw up your offer.

How does the price compare to similar homes in the area?

Once you have a general sense of how much wiggle room there is to work with, it’s time to look at comparable sales in your desired neighborhood. Ask your agent to work up a comparative market analysis (also called a comp or CMA), which will show you the list and sale prices for similar homes that have sold in the last few months. Use that as your guide to home buying.

“The comparables should be your go-to on a first offer,” says Shane Lee on behalf of Realtyhop. “If, for instance, a similar property in the same neighborhood is quoted $10K less, then it makes sense for you to go $10K below the asking price.”

As a home buyer, knowing the market value is key to getting a fair price on your new home.

How badly do you want the home?

Last but not least, ask yourself: How would you feel if your offer got rejected? Let’s say you’ve been house-hunting for a while and you’ve finally found your dream home. It may be worth it to consider offering exactly what they’re asking for—or a bit more—to let the seller know you’re move-in ready.

“If you want the home badly enough, you need to make the seller an offer they can’t refuse,” advises Jenny Ditty Kang, a real estate agent with Wakefield Reutlinger Realtors in Louisville, KY.

However, if you think you’ll be able to move onto the next property without any issues coming up, there’s no harm in trying to score a deal. In the worst case, the seller rejects your offer and you go back to house-hunting. In the world of real estate, there’s almost always a long list of new and exciting properties.

If you think you can fall in love with another property, don’t waste your time and money competing with multiple offers and other buyers. If you find yourself going over market value or potentially overpaying in a bidding war, take a step back, and ask yourself if this particular house is worth it.

Real estate is expensive, and with the added cost of home inspections, closing costs, Realtor fees, and so on, it’s best to make sure you can afford the house before you get locked into a mortgage you can’t afford.

This last piece of advice may be the most subjective of all, but it’s important. Ultimately, it’s up to you to determine what you’re willing to offer for a house.

Tara Mastroeni, who comes from a family of real estate agents, writes about home and lifestyle topics. You can read more of her work on her website: @TaraMastroeni