5 Steps to Deciding How Much toOffer – or Ask – for Your Home
One of the hardest, most important decisionshomebuyers face is how much to offer for theirhome. And the glut of information on the webabout real estate only makes buyers even crazierthan the decision itself does. Supply, demand,foreclosure rates, mortgage rates – buyers thinkthey need to run spreadsheets and do fancymath to make a smart offer. And THAT can besuper intimidating.
Step 1: What do the “comps” say? First thingsfirst. When it comes to pricing a home, ormaking an offer to buy one, the ‘first thing” isthe home’s fair market value. Both buyers andsellers should work with an experienced, localrealtor to understand what the home’s value is.Most agents will do this by offering you a lookback at similar properties that have recently soldin the neighborhood.
Step 2: What can you afford? This step is muchmore critical for buyers than for sellers.(Unfortunately, sellers, the facts that you needto net a particular amount to buy your nexthome or pay your existing mortgages or creditcard bills off has no relationship whatsoever tothe price at which you should list or will sell yourhome.)
Step 3: What’s your competition? (And what’stheirs?) This is another step at which it’s critical tocheck in with your realtor. You need to know whatlevel of competition you’ll face – whether you are abuyer, or a seller. As a seller, you can find this outby looking at things like how many comparablehomes are listed in your town or yourneighborhood in your general price range. Sellersshould also consider what type of transactions theirhome will be up against – the more distressedproperties with which your home must compete,the more aggressive you must be with your pricingto get your home sold.
4. How much do they need to sell (or buy)it? Buyers: Has the listing in which you’reinterested been reduced at all? By howmuch? Has the listing agent informed you thather clients are highly motivated, flexible or havean urgent need to sell?
5.How much do you want to buy, or sell, theplace? Step #4 was about taking the motivations ofthe folks on the other side of the bargaining tableinto account when formulating your offer and yourlist price. This step is all about you – what’s yourlevel of motivation? Now, buyers, you certainlyshouldn’t offer a price way above what the place isworth (see Step #1) just because you really, reallywant it, unless you have the cash to throwaround. But within the range of the home’s fairmarket value, it may make sense to move higherwithin that range if you are highly motivated to getthat particular property.
Randy BettInvestment Realtor/Author/InvestorReal Estate Professionals Inc.Better Group Real Estate202-5403 Crowchild Trail NWCalgary, AB T3B 4Z1Phone:403-774-7464 Ext:1Fax:403-208-0082Toll Free fax:888-711-6801