How Much Should I Offer on a House?

My name’s Evan Kaufman, your VA loan originator. Here to help explain when you’re putting an offer on a home, there’s a couple of things that you can do to try to make sure you’re putting in the best value possible.

Number one, you want to be working with a real estate agent who can help you ideally evaluate a home’s value.

Sometimes people assume, ‘Oh, I need a full appraisal or whatnot.’

That’s typically going to be done during the home purchase process, where we as a lender are generally going to want to order an appraisal to make sure the value fits.

But in the beginning when you’re putting an offer in on a home, if you’re working with a quality real estate agent, you can generally ask them to do something called a comparable market analysis – sometimes referred to as a CMA.

And that’s where they’re going to pull comparable sales from around the home that you’re looking at, and they’re going to say, ‘Hey, based on these other homes with similar characteristics,‘ – and good ones might even have photos that they’re showing you or sending you, the old listing links so you can see what they look like, going – ‘Hey, all these ones around it, they were selling for x or y,’ making some adjustments based on the home you’re looking at because it might have new or this or it might be a little more outdated, changing things, ‘We think you should offer this much.’

A comparable market analysis will help you determine kind of the value of that home.

Now that’s just for understanding marketwise and getting a good, educated guess on where we think the value really should be on a home.

But there’s also the component that is your personal finances.

So, from that standpoint, if you’re looking at a home, let’s say it’s $400,000, and then all of a sudden, the value around it is showing you do a comparable market analysis with your real estate agent and they’re saying, ‘Great, it looks like 400’s reasonable, maybe somewhere between like 390 and 410 isn’t crazy and the value is probably within that range.’

You’ve got to still ask yourself, ‘Can I afford this? Do I want to afford this?’

And that’s where really working with our lender upfront, such as myself or there’s plenty of other good lenders out there too, but we’d love to work for you.

If you’re working with me, we’re able to go over the financing scenario so you can really get a picture on that specific property of what the monthly payments could look like, your potential cash due at closing in the closing costs all together, specific to the property.

Because remember, every property is slightly different than one another.

The closing cost on Property A are generally going to be a little different than closing cost on Property B.

And then working with a lender who can get you decent estimates is really worthwhile because sometimes people are surprised when all of a sudden they’re looking at that $400,000 home and they’re thinking it’s going to be so much, because they’ve been seeing data online and they’re looking on some online sources that are showing them random financing examples and then they come to find out it’s a little bit better than what they expected.

So, that house they’re going for, maybe they want to be a little more aggressive on it because the monthly payments could be less than they were expecting.

Or sometimes we see folks, especially when we work with VA buyers who are usually wanting to maybe go 5% or even no money down on their loan, they might be using online portals that are assuming 20% down, and that can drastically skew the monthly payments.

So, they’re a little surprised when they get their financing examples on specific homes because they were effectively underestimating how much that monthly cost could be.

So, know this: if you’re buying with a VA loan, you always want to account for how much you want to try to put down on that home and factor that into those online calculators.

So, there’s two ways that hopefully help determine how much you want to offer on a home.

It really comes down to doing that comparable market analysis and knowing your personal financial situation and what the monthly costs can look like as well as the cash you might need to bring to closing on that home.

My name is Evan Kaufman again, here to help you in most states with a VA Loan or conventional loan. Take care.