asking prices of most properties that are for sale reflect present market conditions
and recent sale prices of similar homes in the area. When homeowners price their
homes they try to walk the fine line between getting the highest price and ensuring
the asking price is competitive enough to attract serious offers. While most
Selling Agents advise their clients to realistically price their homes in order
to attract acceptable offers within a reasonable period of time, some properties
may not be properly priced and you should know this before making an offer.
Before making an offer to purchase a home, you should ask yourself the following
What have similar properties sold for in the immediate area?
How long were they on the market?
How does this one compare?
Is it over-priced, under-priced, or fair value?
What type of market is it - is it a Seller's, Buyer's or a Balanced market?
By having this information at your fingertips you will be in position to negotiate
the best price and take advantage of any opportunities that may show up. This
is where the experience and knowledge of a good REALTOR is invaluable. REALTORS
spend a lot of time and energy making sure they know their local market inside
and out. They keep their finger on the pulse of the market and have the resources,
connections and ability to keep you up-to-date with its constant changes. They
know all of the properties currently for sale in your area and are literally
your best resource for finding the perfect home.
main factors that affect market value are...
availability of community amenities, such as public transportation, parks,
stores, churches and schools
quality and consistency of neighborhood planning
future development plans and local zoning
style, layout, size, age and quality of construction of the building
size, shape, privacy and landscaping of the yard
Condition of the Home:
quality and appearance of fixtures
general overall condition of main systems (roof, furnace, electrical system,
central air, etc.)
the asking and selling prices of comparable neighboring homes
The best way of establishing a range of value for a property is to have your
REALTOR prepare a general market analysis of the neighborhood you are interested
in. This will give you a good overview of the current market and will show what
comparable properties have been selling for recently.
Market Conditions and the Economy:
number of homes currently on the market
number of people looking to buy
the state of the local and national economy
current mortgage rates
No matter the condition or desirability of a
property, its value will be affected by current market conditions. Here are the
various conditions you may encounter and how they will affect you:
The number of homes on the market is equal to the number of buyers (supply equals
demand). In this market, prices are stable and homes sell within a reasonable
period of time. It is a calm atmosphere with Buyers having a satisfactory number
of homes from which to choose.
The number of Buyers exceeds the number of homes on the market (demand greater
than supply). In this market prices are increasing and homes tend to sell quickly.
As a Buyer you will probably have less negotiating room and may experience competing
offers when trying to purchase your home.
The supply of homes exceeds the number of Buyers (supply greater than demand).
In this scenario prices tend to drop and the properties stay on the market longer.
As a Buyer you will have more selection and less competition and thus be better
able to negotiate a good deal.
When you understand current market conditions, you are better able to position
yourself as a Buyer. It helps to know if you are in a Seller's, Buyer's or balanced
market when deciding what price to offer. In a Seller's market, there is little
selection and you may have to make a full-price (or even higher) offer if the
home is properly priced in order beat the competition. In a Buyer's market, you
have a lot more selection and plenty of room to negotiate. In a balanced market
you will find a good selection of homes for sale and have a reasonable amount
of time to decide on a home and negotiate the price.
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