Figuring out what to offer for a property can be tricky - it could be the difference between your offer being accepted or not.
Most real estate agents will provide you with a competitive market analysis (CMA), but you can put together a basic one on your own. With this guide, we'll walk through how value a home to give you a solid foundation before you make an offer.
Property valuation is based on two main factors:
To figure out how much you want to offer for a house you like, start by finding homes that have recently sold that are similar. These are your comps. We can find a starting point by triangulating the value of the house based on these comps.
After this, we need adjust the value based on market conditions, which can affect whether or not the seller might be expecting a higher offer or may take less than their listing price. Let's jump in.
Prices for sold houses are a much better picture of house valuations than listings, and they're all in the public record regardless of whether they were sold via agents or directly by owners. You can pull this data from your county's records, but it's usually also available via Zillow, Redfin, and other real estate marketplaces. We'll use Zillow for now.
Based on these comparisons, you can determine whether the house you're looking at should be around the same range as the previously sold houses, higher, or lower. This guide can help you value specific differences more accurately, but note that it can range from market to market.
Now that you have a starting point for the value of your home, it's time to consider market conditions.
The main thing to figure out is whether your house is in a buyer's (more supply than demand, and buyers have power) or seller's market (more demand than supply, and sellers have power). In a buyer's market, more modest offers still have a chance of being accepted, and sellers may be more willing to negotiate and offer concessions. In a seller's market, lowball offers usually won't even be considered, and many buyers will begin waiving contingencies and offer all-cash or expedited closing to make their offers more compelling.
Here are a few things you can look at do get an idea of market conditions:
Once you have a read on market conditions, you can figure out whether you need adjust your original valuation - if it's a hot seller's market, homes will often end up selling for above the price they're listed at. This means you can expect your target home to end up selling for more than comps would suggest. Recent sales can still be effective since many will report the actual price the home sold at, which will account for any difference from listing price. In a buyer's market, the comps should provide a fairly good baseline price.
Want to buy a house, but not sure how much to offer? Use this guide to understand how to run a comparative market analysis and build a good foundation before you value a home.
You’ve been patiently negotiating an offer on a home. Finally, the long-awaited email arrives. Your offer is accepted. Congratulations! But you’re not done yet; it’s time to finalize the offer. Here’s what to do.
The closing process can be intimidating and make you feel like you're out of control. We can bring some clarity into what you can expect out of the closing timeline so you can plan for what comes next.