Understanding the Asking Price

by Joe Taylor, Jr.
CMR Columnist

An "asking price" opens the door to participate in the centuries-old tradition of negotiation. What the seller puts in their ad won't necessarily be the amount that shows up on your mortgage. Use these tips and a good home mortgage calculator to prepare your bid.

Before you can bring your mortgage broker in to cut a check, the buyer and seller must meet in the middle on a fair price. Obviously, the seller wants to earn as much as possible on the deal. Meanwhile, a smart buyer knows how much "wiggle room" the seller has added to the asking price.

Deciding How Much to Offer

To determine whether the asking price of a house is fair, ask these questions:
  • How does the house's cost compare with similar homes for sale in the neighborhood?
  • What does your mortgage broker say about the price?
  • Does the asking price include a home warranty?
  • How long has the home been on the market?
  • Do you foresee the value of the home and community appreciating?

Mortgage Experts Can Help You Negotiate

Professional guidance from mortgage brokers and real estate agents can really help you get the best deal on a home purchase. Mortgage brokers can pre-approve you for a range of mortgage options. That way, you can run a series of figures through a home mortgage calculator to really know what you can afford. A good buyer's agent can use their insider knowledge to understand what the seller will really settle for.

Armed with expert advice and the figures from your home mortgage calculator, you can position yourself for the best deal. Start with a low figure from your mortgage broker's pre-approval range, and work your way toward the asking price. That way, you'll get the most house for your money.

Sources
Legalwiz.com
Quicken Loans
United California Brokers

About the Author
Joe Taylor Jr. coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.

© 2006 CMR. All rights reserved.