WHEN THE PRICE ISN'T THE PRICE
How to Make an Offer
Americans generally hate to bargain. It makes us uncomfortable because we live in a place where the price is the price and it's usually logical. It's very different in other parts of the world. The price is liquid: it moves and shifts on whim; and the buyer is supposed to dicker. I remember watching a cruise ship passenger in Mexico with a vendor. The vendor priced a trinket worth about $2 at $10, clearly expecting the buyer to offer less. Instead, the buyer nodded, pulled out a ten spot and bought the item.
One of the only places we willingly bargain is when we buy a house. We bargain, but that doesn't mean we are comfortable doing so! Often home buyers feel pressure to offer much less, thinking that the offer and acceptance process is some kind of contest with a winner and a loser. That's just not true. When a buyer and seller work to arrive at an acceptable price, they are both moving toward market value. Assuming both have competent professional assistance, neither one is going to settle for much more or less than that!
If you are preparing to make an offer on a property, please do the following:
- Ask your agent to do a full market analysis on the home and to review it with you. See what similar homes in the same area are selling for. Weight the most recently sold heavier. Look at the trend in prices - have they been rising or falling? Arrive at a range of value on the home that would indicate an acceptable final price. Then compare that with the seller's list price. Is it overpriced? Or under-priced? Or is it just right?
- Ask your agent to run a report on List-to-Sale price ratio for the area. How far off list price are sellers in this general area coming to make a sale? Over the past year, have they come down 2%? or is it more like 5%. If you discover that the List-to-Sale price ratio is, say, 97% (meaning that buyers are generally paying 3% less than list price on sale), an offer much lower than that may be insulting, and insulted home sellers often become unreasonable.
- Ask your agent to find out what the average Days-on-Market for houses in the area is. If the market is slow - say, 120 days from listing to contract - a lower offer might be in order. If they are moving faster - anything under 60 days on market - a low offer may be overtaken by one closer to list price. AND: if houses are selling in less than 30 days - make your best and strongest offer first.
- Ask your agent to find out what recent activity has been like on the house. Is it being shown a lot? Is it possible you may be walking into a multiple offer situation, a bidding war?
- Make sure your financing is set and ready to go. Whether you are competing or not, a seller who is comfortable you can get the financing you are proposing is far more willing to negotiate than one who is not. Send a lender pre-approval letter with your offer.
Above all, listen to your agent. This is a professional who works in this market place every day. He or she should know what's selling and for how much. One of the main reasons you have an agent it to get expert advice when making an offer. Heed it! Of course, there is no one better able to help you put together a great transaction on your dream home that the professionals at Help-U-Sell Conejo Valley. We will provide you every bit of information you need to make a good decision and will help you sort through it an your way to a successful purchase.
Help-U-Sell Conejo Valley is a progressive, full service real estate company saving buyers and sellers thousands in Westlake Village, Thousand Oaks, Oak Park, Camarillo, Oxnard, Simi Valley, Los Angeles and all of the Conejo Valley. You may reach us at (805) 379-3300, or by email to [email protected]. Visit our website: www.helpusellcv.com.