|
The
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
questions:
- 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.
The main
factors that affect market value
Location:
- 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
Property:
- style, layout,
size, age and quality of construction of the building
- size, shape,
privacy and landscaping of the yard
Condition of
the Home:
- first appearances
- floor layout
- quality and
appearance of fixtures
- general overall
condition of main systems (roof, furnace, electrical system, central
air, etc.)
Comparable Properties:
- 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
Market Conditions
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:
- Balanced
Market:
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.
- Seller's
Market:
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.
- Buyer's
Market:
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.
In Summary:
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.
|
