So you’ve reached the stage in the home buying process when it’s time to decide what price you’re going to offer. This is an important step because it sets the stage for the upcoming negotiations. It’s very rare that you’ll actually pay the amount of your initial offer; negotiations and other factors such as the market will dictate where the final price is agreed on. Still, it’s important to know how to arrive at your initial offer. Keep on reading to learn more about how this works.
How should you price your offer on a new home?
Home Buying Tips: How to Price Your Offer
As we talked about in last week’s blog, comps are a big piece of the puzzle when it comes to determining the value of a home. Now that comps have been found, it’s time to create the comparative market analysis, also known as a CMA.
Comparative Market Analysis (CMA)
Your real estate agent will create the comparative market analysis. This is basically all the information from all the comps you’ve looked at grouped together in one place. This makes it easier to compare the comps.
Here’s what the CMA typically includes:
- List and sales prices for properties that have recently sold.
- List prices for pending sales (transactions that haven’t closed yet).
- List prices for houses that didn’t sell and were taken off the market.
- Square footage.
- Home age.
- Number of bedrooms and baths.
- Room sizes.
- Amenities.
- School districts.
- Property taxes.
- Amount of time spent of the market.
Factors that Influence Your Offer
In addition to the CMA, there are a number of other factors that will influence your offer.
The Market
Is the market geared towards buyers or sellers? If its a buyers’ market, you may be able to make a better offer in terms of your interests. If it’s a sellers’ market, you may have to offer more than the asking price.
Motivation of the Seller
Is the seller just trying to get rid of the house fast? If so, you may be able to make a better offer. If they’re in no hurry though, you won’t be able to do this. The seller probably won’t willingly volunteer their full motivations for selling, but keep your ears open.
How Long the House has Been on the Market
The longer the house has been on the market, the more willing the seller may be to accept a lower offer. If the house just went on the market and you know you have to have it, you may have to increase your offer.
Ask Us Your Questions
Do you have questions about buying a new home in Maryland? Grays Home Solutions has answers! Contact us today at 240-347-3141 to get your questions answered!
Check out our other blogs in our home buying series: