Deciding on Price
I get this question all the time once my clients find a home they like:
If we wanted to put in an offer for this property, how much should we pay?”
It’s a completely valid question and more often than not, I cannot answer them on the spot. To accurately find a fair price for most homes, your Real Estate Agent should complete a CMA (Comparative Market Analysis). This CMA will contain at least 3 similar sized homes in the near vicinity that have sold within the past 6 months. The reason you need to have a CMA for the property you want to buy is so you don’t end up paying too much.
This is something not a lot of buyers worried about 3-5 years ago, but if you want to keep your house and not end up going into foreclosure, it’s absolutely essential to look at this CMA closely and make an offer within the price range of these homes.
Another method I use is to look at the Tax Assessed Value history, and I’ve seen more often than not, homes are selling in 2009 for somewhere around their 2002-2003 Tax Assessed Values. May just be a coincidence, but it seems to reinforce the prices I see in my CMAs.
The hardest part is comparing owner-occupied homes to bank-owned foreclosures, or even short sales. Owner-occupied homes on average are selling for about 33% more than foreclosures in the Twin Cities.
So that means all things being equal, a bank-owned home with the same dimensions in the same neighborhood as an owner-occupied home would sell for $100,000 and the owner-occupied house would go for $133,00.
The other things I hear a lot of buyers say is that “If it’s a foreclosure, then we can get it for super cheap, right?!” Well, yes and no.
It’s all relative. These bank-owned homes will be very discounted when you look at their real estate market values from 3-5 years ago. But don’t expect to offer $50,000 for a house listed at $80,000 and get it accepted. Especially if the home only needs minor repairs or updating to make it a nice home.
The good homes in the Twin Cities are still getting sold fairly quickly. If they are priced right and aren’t complete wrecks, then I usually see an accepted offer within 90% of listing price in the first month.
In fact, during the past 3 weeks, I have had 3 different buyers lose out on these sales due to multiple offer bidding wars. So that goes to show you that you can’t expect to sit back and have your complete pick of the litter of properties.
The inventory is ever-revolving in MN, and just because you see a house on Monday won’t guarantee that it’ll still be Active on Friday.
Bottom line: Make sure you analyze what a fair price would be for the home with your Agent. They should be able to steer you towards the right price range. Ultimately it’s your call as the buyer, so tell them your thoughts and always ask questions. This will help them assist you best.
Once you find the right home, don’t blink. Write the offer for a fair price, and let the chips fall as they may. If you don’t get the house, don’t worry!! There’s ALWAYS another home that will fit your needs.
Related Posts
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment