| Determining
Your Offer Price on a Jacksonville Home
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.
copyright
2006 by Terry Light and RealEstate ABC
Determining
Your Offer Price
Comparable
Sales in the Public Record
The
most accessible source of information on comparable
sales is the public record. When someone buys
a home the property is deeded from the seller
to the buyer. In most circumstances, this deed
is recorded at the local county recorder's office.
They combine sales data with information already
known about the property so they can assess
property taxes correctly.
Provided
there have been no additions to the property,
the information available from the public record
is usually correct regarding sales price, square
footage, and numbers of rooms. This makes it
easy to use the public record as a source of
data for comparable sale information.
Accessing
the data is another matter, at least for the
general public. Realtors can generally look
up this information through title insurance
companies. The title companies either compile
the data directly from the county recorder's
office or purchase if from other companies.
One
problem with the public record is that it tends
to run at least six to eight weeks
behind. Add another four to six weeks for the
typical escrow period and you can see the data
is not current. The most current information
is the most valuable.
Comparable
Sales in the Multiple Listing Service
Most
of the public is aware that the Multiple Listing
Service is a private resource where Realtors
list properties available for sale. Recently,
the public has been able to access some of that
information on such sites as Realtor.com, MSN
HomeAdvisor, and others.
Once
a property is sold and the transaction has closed,
the selling price is posted to the listing in
the Multiple Listing Service. Over time, it
has become a huge database on past sales, containing
much more information on individual homes than
can be gleaned from the public record. This
information is only available to real estate
agents who are members of the local Multiple
Listing Service.
Your
agent will provide you with this data to help
determine your offer price.
copyright
2006 by Terry Light and RealEstate ABC
Determining
Your Offer Price
Comparable
Sales - Pending Transactions
The
most valuable information would be the most
current, of course. A sale last week has more
validity in helping you determine a purchase
price than a sale from six months ago. The problem
is that there is no actual record of the sales
price until the transaction is completed. The
information is not available in the public record
because no deed has yet been recorded.
Neither
is the information available in the Multiple
Listing Service. Once a property is sold, it
becomes a "pending sale" and all pricing
information is removed from the listing. Prices
are not posted until it becomes a "closed
sale." This protects the seller in case
the transaction falls apart and the property
is placed back on the market. It would give
an unfair advantage to future potential buyers
if they already knew what price the seller had
been willing to accept in the past.
However,
if a Realtor has a reason to know the sales
price, they can usually find out through professional
courtesy. Also, some real estate brokerages
post sales information on a transaction board
in their office.
Conclusions
Gathering and analyzing
information from comparable sales helps to establish
the range of prices you should consider when
making an offer to buy a home. More weight should
be given to the most recent sales, but even
so, you need to do a bit more analysis before
setting upon the price you will offer. That
is because you also need to consider the condition
of the property, improvements, the current market,
and the circumstances behind the seller's decision
to sell.
copyright
2006 by Terry Light and RealEstate ABC
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