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Determining Your Offer Price
When you prepare an
offer to purchase a home, you already know the seller’s asking price.
But what price are you going to offer and how do you come up with that
figure?
Determining your
offer price is a three-step process. First, you look at recent sales of
similar properties to come up with a price range. Then, you analyze
additional data, such as the condition of the home, improvements made
to the property, current market conditions, and the circumstances of
the seller. This will help you settle on a price you think would be
fair to pay for the home. Finally, depending on your negotiating style,
you adjust your "fair" price and come up with what you want
to put in your offer.
Comparable
Sales
The first step in determining
the price you are willing to offer is to look at the recent sales of
similar homes. These are called "comparable sales."
Comparable sales are recent sales of homes that compare closely to the
one you are looking to purchase. Specifically, you want to compare
prices of homes that are similar in square footage, number of bedrooms
and bathrooms, garage space, lot size, and type of construction.
If the home you are
interested in is part of a tract of homes, then you will most likely
find some exact model matches to compare against one another.
There are three
main sources of information on comparable sales, all of which are
easily accessed by a real estate agent. It is somewhat more difficult
for the general public to access this data, and in some cases
impossible. Two of the most obvious information sources are the public
record and the Multiple Listing Service.
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