Choose the Best REALTOR®
Setting a Value on a Home
Two of the most frequent questions we receive from potential home buyers are "how
much should I offer for a house?" and "What is the normal concession from the selling price?" There
are, unfortunately, no stock answers to those questions. Unlike the automobile business (one of the other major
purchases where prices are negotiable) Real Estate does not have an established selling price nor a specific cost.
There is no MSRP (Manufacturer's Suggested Retail Price) nor an Invoice cost for a house. Therefore, it is impossible
to give "standards" as to what is either fair or normal. Every property stands on its own price and merits.
Why then the $8050 difference in list price? Perhaps the seller of Property A has been relocated to another city and needs a quick sale (and is "motivated") while Property B's seller is simply "testing the water" (and has no motivation for selling). Maybe the seller of Property B simply has an inflated view of what their home is worth. For the buyer, though, it is imperative to be aware of the true facts (rather than speculation) since it would be easy to pay too much for Property B if they simply used the misconception of "you should take 2 or 3% off any selling price." With that scenario, the buyer would still pay too much for Property B ($140,650 - $142,100 with a neighborhood average of $137,850) and runs the risk of losing Property A, which is already priced UNDER the neighborhood average.
Obtaining Property Values
The simplest method of gaining knowledge about property values is from your Agent. If you are being represented by a Buyer's Agent, the Agent can develop a Comparable Market Analysis for homes in the area in which you are interested. This will give you valuable information you will need before you make an offer. If you are planning to buy a home without the assistance of an Agent (or, if you are looking for preliminary information) there are sources of information available online.
of the most important uses of property value information is as a basis for an offer on a home, but it is just as
important as a guide in negotiation. For example, there is nothing wrong with making an offer below the listing
price (even if the listing price is in range of the neighborhood average) but to lock-in on a low price that is
considerably below the average may mean disappointment if you have found an ideal home. In addition, it is important
to remember that other buyers may have access to the same information that you do--meaning that if a home is well
priced and within the neighborhood averages, there is always the possibility that a competing--and higher--offer
will result in a contract for the other buyer. Until the seller has accepted an offer in writing, and the buyer
notified, the seller is free to consider offers from other potential buyers.