What to Offer When Buying a House
Before submitting an offer on a property, it is important to know what the local market is doing.
I am Kristine Glockler, a highly experienced REALTOR in the Chicago suburbs and southern Wisconsin, offering top-notch expertise and best-in-class service. If you’re thinking of buying, selling or investing in Naperville, Orland Park, Plainfield, Lemont, Palos Park, Burr Ridge, or any of the surrounding regions, let me know. (708) 480-2011 We are based out of FOUR offices to best help our clients - including offices in the northwest Chicago Suburbs and southeastern Wisconsin. The Glockler Group has been helping local buyers, sellers and investors since 1978!
As of the time of this writing (August 2023) and much of the last four years in our market, it is a home seller's market. In a seller's market, essentially, there are more buyers than there are homes for sale and the monthly supply of inventory is under six months. A lot of our Chicago suburbs (in the most common price range) are experiencing a monthly supply of inventory at or under two months. When there is such a disparity between supply and demand, this can lead to increased competition among buyers, driving up prices and making it less likely for sellers to accept significantly lower offers.
What to offer on a home? You want to base the offer on factual, recent market statistics, taking into consideration the property’s features and upgrades, while balancing it with what you are comfortable with. The saying goes “a house is only worth what a buyer is willing to pay.” Unique circumstances aside, there are a lot of buyers (due to supply and demand) willing to pay more for properties now. If you’re hoping for a great deal on a property in the most common price range - or to make a seller’s market into a buyer’s market - this might not be the right time for you to buy.
Let’s explain why offering a lowball offer in this market probably won’t get you anywhere:
Low Inventory: If the housing inventory is low, sellers have less incentive to accept lowball offers because they know there are limited options for buyers, potentially leading to them receiving higher offers. In my experience, more times than not in the most common price ranges, a property is selling for at - or above list price - many times with competitive offer terms as well. Keep in mind, real estate is highly local - so at the time of the offer we’ll want to look again at the community, property type, price range and market stats within those…as there could be a drastic difference.
Price Trends: If property prices have been steadily rising, sellers might be more reluctant to accept low offers because they expect the value of their property to continue increasing - and that is what is happening in many of our local markets. However, there are a handful of markets I have first-hand experience in that are building inventory and therefore, not all properties are selling at or above list price at this time.
Economic Conditions: During periods of economic stability and growth, sellers might feel more confident about holding out for better offers. In uncertain economic times, they might be more open to negotiation.
Interest Rates: Low interest rates can drive more buyers into the market, increasing competition and potentially reducing the likelihood of sellers accepting lowball offers. Rates have recently increased but in the local Chicago suburban market, we are still seeing multiple offer situations. If rates drop, then homebuyers should expect even more buyer demand on properties, and if the market is still how it is now…then increased prices as well.
Local Market Dynamics: Real estate is highly localized. Factors like neighborhood desirability, school quality, and proximity to amenities and commuter trains can all impact a seller's willingness to negotiate. For real estate, it is all about home location, condition and price. If at least one of those is off, your home might not be selling because it’s not compelling.
Seller Motivation: Understanding the seller's motivation is crucial. If they are highly motivated to sell quickly (due to relocation, financial difficulties, etc.), they might be more open to accepting lower offers. However, if you’re a cash buyer you might be competing with other cash buyers as well. I’ve seen sellers take financing offers over cash, if cash offers came in too low and buyers with financing had a very competitive offer price.
Comparable Sales: Buyers can use recent comparable sales (comps) in the area to assess whether a property is overpriced or reasonably priced. If recent sales have been higher, a lowball offer might be less likely to succeed. It is important to know that there are three ways to price a property: over-price, price at market value, or under price a listing. Where a home is price should not determine what you offer. Some Listing Brokers and sellers have been under-pricing listings lately to drive multiple offers.
Confused by the national headlines about the real estate market? Keep in mind, real estate on the West Coast, East Coast or the South is not the same as in our local Naperville, Orland Park and Schaumburg real estate markets. Be mindful of where you are seeing real estate market information and from where you are receiving it. There are also a lot of new REALTORS out there who might not understand the real estate market, trends, etc. and giving incorrect information on social media, etc.
If you’re looking to buy, sell or invest, let’s talk: (708) 480-2011. Let me know you saw this post!
