As we get closer to spring, many of you may be contemplating a home or other type of property purchase. Once you have found a home that you’d like to submit an offer on. The next and most important question you ask yourself and your REALTOR® is how much do we offer?
The following are 10 things that you need to know in order to help you formulate an offer and a negotiating strategy. I have separated these 10 things into two distinct categories.
- What are the list and sale prices of similar properties, preferably sin the same
- What is the current trend in prices, up, down or stable? What is the ratio
between the list and sale prices.
- What is the current supply and demand in the area you are looking? In a high \
demand low supply market you may be faced with competing offers.
Conversely in an area or price range with lots of inventory you are not.
- What is the absorption rate ie: the number of month’ supply of inventory in the
area? Less inventory in a given area can make for a more competitive market for
- What is the “average time on market?” Because listings expire and properties are often re-listed for sale, the cumulative time that a property has been on the
market is important.
- Is the property you are considering well kept, up to date and in good condition
of are substantial repairs and upgrades needed?
- What sis the cumulative length of time on market for the property? Substantial
days-on-market can signify slow market conditions, a pricing issue with the
property or some other form of problem such as location, deficiencies in the
- What is the seller’s motivation? Often it is not possible to find this out and the
REALTOR® that has listed the property is obligated to keep his Seller client’s
motivation private. They may however have an offer on something themselves
or are otherwise anxious to get the property sold so you can always ask.
- What terms is the Seller looking for? The cleaner the offer with fewer
conditions the better. Having pre-approval of your financing or being able to
make a cash offer with a short closing gives you a lot more leverage to negotiate
- What is the sales history for the property? While what someone paid for a
property is somewhat irrelevant, it is very easy for a REALTOR® to check
land registry records in order to see what a property last sold for. Using that
information, plus allowing for increases or decreases in market values plus the
cost of any improvements that have been made will assist you in determining a
fair price for the property today.
By obtaining answers to these 10 questions, you will have some valuable insight into preparing an offer and then further negotiating the process that will allow you to arrive at a purchase price that represents fair market value for both you and the Seller. Contact me to learn more.