Offer Price - Determining...

When preparing an offer to purchase for a home, ask yourself; how much are you going to offer, and how are you coming up with that figure? Determining your offer price takes three steps. First, study recent sales of similar properties to come up with a price range. Second, analyze any additional data such as, current market conditions, condition of the home, improvements made to the property, and the circumstances of the seller. This will help you settle on a fair price to pay for the home. Finally, depending on your negotiating technique, adjust your fair price and come up with what you want to put in your offer. Be sure to take all aspects of the offer into consideration and how it affects the bottom line. Comparable Sales Comparable sales are recent sales of homes that compare closely to the one you are looking to buy. You will want to study the compared prices of homes that are similar in square footage, type of construction, number of bedrooms and bathrooms, garage space, and lot size. Adjustments are made for all these items. If the home you are looking to buy is part of a tract of homes, you will probably find a few exact model matches to compare against one another. There are three main sources of information on comparable sales, which a real estate agent can easily access. This information can be either rather difficult, or impossible for the general public to obtain. Two information sources are the public record and the Multiple Listing Service. Comparable Sales in the Public Record Information on comparable sales should be most accessible at the public record. That is because when someone buys a house, the property is deeded from the seller to the buyer. In most cases, this deed is recorded at the local county recorder's office. They combine sales data with information already known about the property. This enables them to assess property taxes correctly. If no recent additions to the property were made, the information available from the public record will most likely be correct regarding sales price, square footage, and numbers of rooms. For the general public, accessing this data is another matter. Realtors can usually look up this information through title insurance companies. These companies either gather the data directly from the county recorder's office or purchase it from other companies. There are a couple problems with the public record. It tends to run at least six to eight weeks behind, and if you add another four to six weeks for the typical closing/escrow period, it won't take much to see that this data will not be current. The most current information is the most valuable. Comparable Sales in the Multiple Listing Service The Multiple Listing Service is a private resource where Agents/Realtors list properties available for sale. The public has recently been able to access some of that information on such sites as MSN HomeAdvisor, Realtor.com, and others. Once a house is sold and the transaction has closed, the selling price is posted in the Multiple Listing Service. It has become a huge database on past sales, containing quite a bit more information on individual homes than the public record could offer. However, it is only available to real estate agents who are members of the local Multiple Listing Service. Your agent should provide you with this information to help determine your offer price. Comparable Sales - Pending Transactions Naturally, up-to-date information is the most valuable. Unfortunately, until the transaction is complete there is no actual record of the sales price, and the information is not available in the public record because no deed has yet been recorded. The same holds true for the Multiple Listing Service. Once a property is sold, it becomes a "pending sale" and all pricing information is removed from the listing. Prices are not posted until it becomes a "closed sale." The reason for this is to protect the seller in case the transaction falls apart and the property is placed back on the market. Future potential buyers would have an unfair advantage if they already knew what price the seller had been willing to accept in the past. Depending on the reason, a Realtor can usually find out through professional courtesy. In addition, some real estate brokerages post sales information on a transaction board in their office. Other Factors Influencing Your Offer Price Gathering and analyzing data from comparable sales will definitely help guide you when making an offer to buy a home. Remember, more weight should be given to the most recent sales, but it is imperative that you analyze other factors before settling upon the price you plan to offer. Other things you need to consider are: the condition of the property, improvements made, the current market, and the circumstances behind the seller's decision to sell.