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What's It Worth? Structuring an Offer.

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Three steps to putting together a contract to purchase a property: 1) How is the market trending? 2) Look at the comps to determine the offer price. 3) Writing a contract beyond the purchase price: …

Three steps to putting together a contract to purchase a property: 1) How is the market trending? 2) Look at the comps to determine the offer price. 3) Writing a contract beyond the purchase price: timing and contingencies.

Published in: Self Improvement

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  • 1. What’s It Worth? Structuring an Offer
    Monica Florio
    Long & Foster, Realtors
    June 11, 2011
  • 2. Step 1: What’s the market temperature?
    How is the market trending?
    Is demand increasing or decreasing?
    Is this a buyer’s market or a seller’s market?
    Why does it matter?
    As a buyer, this tells you how much you’ll be competing with other buyers for the house you want.
    It also tells you how much time you have to act.
  • 3. Defining a buyer’s market
    An excess of supply over demand, leading to abnormally low prices
    What you’ll see in a buyer’s market:
    Houses sitting on the market for a long time
    Sellers offering incentives tobuyers, like seller-paid closing costs and home warranties
  • 4. Defining a seller’s market
    An excess of demand over supply, leading to abnormally high prices
    What you’ll see in a seller’s market:
    Fewer days on the market
    Homes selling for more than asking price
    Multiple offers
    Fewer contingencies, shorter contingency time frames
  • 5. Months of supply
    Inventory = Number of properties for sale
    Number of homes sold in the last 30 days
    4-6 months of inventory is a market in balance
  • 6. How is the market trending?
    Is the # of months’ inventory increasing or decreasing? That gives us an indication of which direction the market is headed.
    4-6 months
    1-4 months
    6+ months
    Buyer’s market
    Market in balance
    Seller’s market
  • 7. Step 2: Look at the comps
    “Comps” are properties comparable to the one that you are writing a contract to purchase
    Look for properties that are the most similar, and use activity that is the most recent possible to the property that you want to buy.
    Look at:
    What has SOLD recently
    What is UNDER CONTRACT
    What did NOT SELL
    What is AVAILABLE (most likely you’ve already seen the other similar properties on the market)
  • 8. Biggest factors influencing price
    Location (biggest influence on price): city, neighborhood, position within the neighborhood, attractiveness of the lot
    Size: square footage, lot size
    Condition (smallest influence on price): does it need major upgrades?
  • 9. Step 3: Put it in writing
    The next decisions are about timing:
    Your timeline vs. seller’s timeline
    How many days for home inspection?
    How many days for financing / appraisal contingencies?
    When do you want to close?
  • 10. Other factors to consider
    Will you ask the seller to pay closing costs?
    Will you add additional contingencies, or waive a few contingencies?
  • 11. Putting it all together
    In determining price and the other factors that go into a purchase contract, we’ll consider:
    How the market is trending
    What comparable properties are selling for
    Other factors, such as timing, that will be influenced by market conditions
  • 12. Sources of information
    Metropolitan Regional Information Systems (MRIS)
    Northern Virginia Association of Realtors® (NVAR)
    The Long & Foster® Market Minute
  • 13. The Smarter Homeowner Seminar Series
    Register at:
    http://www.urbanlivingintheburbs.com
    Location:
    Long & Foster Fair Oaks
    13135 Lee Jackson Highway
    Fairfax, VA 22033
    703-651-2502
  • 14. Monica Florio
    Long & Foster, Realtors
    703-651-2502
    monica@LNF.com
    www.urbanlivingintheburbs.com

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