How Much Should You Pay For The House You Love?

House-ClipartAfter months of searching and looking, you have found the house of your dreams and are ready to write an offer.  How much should you offer as an opening bid?  As Realtors bound by a code of ethics, we are not allowed to suggest a price to you even when you ask what our opinion is.  The reason is simple; perhaps I tell you to offer $10,000 less than asking price and, at the same time as we present our offer, another offer comes in at $9000 less than asking price and the seller takes it without giving you a chance to rebid.  You would be very upset with me and consider it very unprofessional that I allowed you to lose the home of your dreams.  Therefore, it is your decision how much to offer but you can count on your Realtor to give you a great deal of information to help with the decision.

Comparative Market Analysis (CMA)

  • A detailed comparative market analysis shows active listings, recently sold properties, pending sales and expired listings.
  • This will be prepared for you by your Realtor using the information from the Multiple Listing Service (MLS).
  • This analysis will help you see the trends in the market in general and the history of the home you are interested in – all details that will help with your ultimate decision on offer price.

Market Facts To Consider

  • Prices of similar properties – both list and sale prices of similar properties in the area need to be considered.  You don’t want to pay too much but you don’t want to insult the seller with an offer that shows you are not educated in market values.
  • Price Trends – what is the current percentage of list price to sales price.
  • Supply and Demand – in the current market in the Naples area where we have large demand and the supply is dwindling you may face a multiple offer situation when your offer is presented.
  • Absorption Rate – number of month’s supply of inventory.  A couple of years ago there was a huge inventory of houses available in Naples, that number has reduced quite a bit in the last few months.
  • Average Time on Market – how long do homes in this area usually stay on the market.

Property Facts To Consider

  • Property condition – is the house in good condition or will you need to make substantial repairs.
  • Length of time on market – how long has this house been listed for sale.  This may give a good indication of the seller’s motivation.
  • Seller’s motivation – if you have information on this it can help with the offer.  A seller under pressure may accept a lower offer than usual.
  • Terms – what terms and contingencies must you write into the offer?  Of course cash is very attractive to a seller, quick closing dates help your case as well.  If you must get a mortgage make sure you have a pre-approval for financing so that the seller knows you will be able to get the mortgage.

All of these points will help you make an informed and wise decision on your offer price.  Remember, the seller is selling a home and you are buying a house so both of you have different views of the transaction.

I have helped many buyers find their dream homes in Naples and I would love to help you.  Please call me at 239-601-3174 so that we can start our search for your perfect home.

Remember, it is always toasty in Naples and you deserve your piece of Naples sunshine!

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