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By Tara-Nicholle Nelson | Broker in San Francisco, CA

5 Steps to Deciding How Much to Offer – or Ask – for Your Home

One of the hardest, most important decisions homebuyers face is how much to offer for their home.  And the glut of information on the web about real estate only makes buyers even crazier than the decision itself does.  Supply, demand, foreclosure rates, mortgage rates – buyers think they need to run spreadsheets and do fancy math to make a smart offer.  And THAT can be super intimidating.

But the fact is, there is a pretty short list of steps you need to take to make a smart offer – one that gets you a great value, but is also likely to be successful at getting the property. (A low offer does not make for a great deal if you don’t get the house!)  And most of the same steps apply to sellers trying to set the list price that will lure the most buyers (and net them the most cash)!

Step 1: What do the “comps” say?  First things first. When it comes to pricing a home, or making an offer to buy one, the ‘first thing” is the home’s fair market value. Both buyers and sellers should work with an experienced, local agent to understand what the home’s value is. Most agents will do this by offering you a look back at similar properties that have recently sold in the neighborhood – i.e., the  comparable sales, or comps.

HINT: You can also find comps for a home listed on Trulia by scrolling down to the section labeled Sold Homes near 1234 Merriweather Lane on the property's Trulia listing page.

Ideally, look for comparables that are very recent sales (3 months or less before you’re listing or buying), very similar properties (i.e., same number of bedrooms, bathrooms, square footage; and similar style, condition and amenities). If you do get into contract, these may be the same comparables which will be considered by the appraiser, so looking at them before making an offer can:

(a) provide factual support for a lower-than-asking offer or for the asking price, in a negotiation, and

(b) result in a sale price at which the property will actually appraise, later on - avoiding the common glitch of the deal falling through because the appraisal comes in way below the agreed-upon price.

Also, looking at comps is the first step for locating a home’s seller and prospective buyer in the reality-based universe of current home values.  The fact that you bought or refinanced the place at a given value 5 or 6 years ago is entirely irrelevant to what it’s worth today, as is the buyer’s belief that the place was worth $100K less at the trough of the market, in 2009.

Step 2:  What can you afford?  This step is much more critical for buyers than for sellers. (Unfortunately, sellers, the facts that you need to net a particular amount to buy your next home or pay your existing mortgages or credit card bills off has no relationship whatsoever to the price at which you should list or will sell your home.)

Buyers – it’s a must to make sure that your offer price for any given home falls within the range of what is affordable for you.  This includes offering a price within the range for which your mortgage was preapproved, but also includes making sure that the monthly payment and cash you’ll need to close the deal (down payment + closing costs) are affordable in light of the particular house. If, for example, the property will require repairs for which you’ll need to conserve cash, or has HOA dues you hadn’t planned on, you may need to rejigger your offer accordingly.

Step 3: What’s your competition? (And what’s theirs?)  This is another step at which it’s critical to check in with your agent. You need to know what level of competition you’ll face – whether you are a buyer, or a seller.  As a seller, you can find this out by looking at things like how many comparable homes are listed in your town or your neighborhood in your general price range (your agent will brief you on this).  Sellers should also consider what type of transactions their home will be up against – the more distressed properties (foreclosed homes and short sales) with which your home must compete, the more aggressive you must be with your pricing to get your home sold.

The more competition you have, as a seller, the lower you should tweak your list price to attract buyers to come see your home. (And the more buyers come to see your home, the more likely you are to get an offer!)

Buyers should also be cognizant of the competition level they will face for homes.  Believe it or not, even on today’s market there are properties and neighborhoods in which multiple offers are the name of the game. Work with your agent to understand the list price-to-sale price (LP:SP) ratio , which lets you know how much under or over the asking price properties are selling for in your target home’s neighborhood; the higher the LP:SP ratio, generally speaking, the less competition there is among buyers. 

Your agent can also brief you on:

(1)  (1)    The number of offers – if any - that have been presented on “your” property (which the listing agent will usually, gladly tell).  If there are other offers, you’ll want to make a higher offer to compete successfully against them; and

(2)    (2)  The number of days the home has been on the market, relative to how long an average home stays on the market before it sells – the longer it has, the more pressure is on the seller, price-wise, and the less competition the buyer is likely to have.  (One exception is the sweet spot scenario, when a property that has been on the market for a long time has a price reduction and gets a bunch of offers as a result! )

4.  How much do they need to sell (or buy) it?  Buyers: Has the listing in which you’re interested been reduced at all?  By how much?  Has the listing agent informed you that her clients are highly motivated, flexible or have an urgent need to sell?   

Sellers – most buyers are not in a high state of urgency to buy these days, given the long-term, high affordability of homes and interest rates, except when they have an urgent personal reason for moving, e.g., buyers who are relocating for work.  Of course, all of real estate is hyperlocal, so it’s important to understand how motivated buyers are in your local market, generally speaking, before you set your list price.

Trulia’s new, interactive Trulia's Price Reductions MapPrice Reductions Map offers a number of clues to critical indicators of buyer and seller motivations in your home’s town and zip code, in just a click on the map - including:

·         how many homes in your target property’s area have had at least one price reduction,

·         how likely a home in the area is to have multiple price reductions.

The higher these numbers are, the stronger of a buyer’s market it is, and the more bargaining power buyers likely have.   And if you’re the seller, the higher these numbers are for your area, the lower you may need to price your home to be successful at getting it sold.

5.  How much do you want to buy, or sell, the place?  Step #4 was about taking the motivations of the folks on the other side of the bargaining table into account when formulating your offer and your list price.  This step is all about you – what’s your level of motivation?  Now, buyers, you certainly shouldn’t offer a price way above what the place is worth (see Step #1) just because you really, really want it, unless you have the cash to throw around.  But within the range of the home’s fair market value, it may make sense to move higher within that range if you are highly motivated to get that particular property.

Sellers: think of your list price as the most powerful marketing tool at your disposal. if you really want or need to sell, get aggressive about setting your price as low as makes sense for your your home's value and local market dynamics to attract qualified buyers and help your home stand out against all the competition.

P.S. - You should follow Trulia and Tara on Facebook, too!


Comments

By Crystal Tost,  Thu Apr 14 2011, 09:19
Great post, you have inspired me to write a blog about this as I think first time home buyers could really use this sort of advice.
By Tean Wong,  Thu Apr 14 2011, 09:22
Nice post...as always.
By Mike5885,  Thu Apr 14 2011, 09:22
Thank you
By Kris and Tammy Hanson,  Thu Apr 14 2011, 09:29
Thank you for this timely information. Your insights are in line with what we see here on the front lines of Real Estate in St Charles County, Missouri!!
By Ray Akers,  Thu Apr 14 2011, 09:34
Normally, I enjoy your columns. This column is confusing and difficult to follow. This is really two separate columns, not one. Buyers issues are very different from seller's issues and it's difficult to combine them in the same column.

I'd like to see a column on strategies for sellers facing a tough market ---a buyer's market. I'd also like to see a column for buyers which educates them about how make an offer that will be accepted. I'd like to see a third column which deals with the plethora of websites offering estimates of property value, based solely upon historic data ---without the benefit of experienced analysis that agents provide. (Data without professional analysis is dumb data and helps nobody when it comes to buying or selling real estate.)

Thanks for interesting and timely topics.
By Becca Ly,  Thu Apr 14 2011, 09:34
great & helpful information!
By Julie Anne Young,  Thu Apr 14 2011, 09:35
I am very diappointed with Trulia, Everytime they have an article to send out it never goes through to the emails. There is always and "oops" I believe they get our emails just to send out the advertisement that pops up and not the article I am trying to send.
By Matthew Mcclelland,  Thu Apr 14 2011, 09:37
You always have exactly what we are telling our clients. It's nice they can hear it from someone else.
By Katie Wickham,  Thu Apr 14 2011, 09:39
As much as I love and will never give up my spreadsheets, reminds me of how my husbands "gut" offer amount and the result amount in the characteristics-of-recently-sold-homes-similar-to-ours analysis I spent hours building were just a few thousand dollars apart. At least the exercise made me feel better about the offer.
By Cesar Aviles,  Thu Apr 14 2011, 09:48
Great advise specially the one about using the services of a real estate agent; experience in real estate is not about the time an agent is been in business but how many transactions have they closed.
By David Miller,  Thu Apr 14 2011, 09:48
You don't mention that an appraisal by a certified residential appraiser would indicate true market value prior to listing. Regardless of what price the buyers sellers or agents decide on,the appraiser, if there is a bank loan will ultimately decide market value.
By Donald James,  Thu Apr 14 2011, 09:52
Nice job Tara. I would add that in buying or selling any home today we also need to provide our clients with a Price Trend Analysis as well. One of my clients recently closed on a home for $30,000 below list because the Price Trend Analysis showed an over supply in a still declining market. We shared the information with the seller and her agent and they agreed to our price.
By Steve Chung,  Thu Apr 14 2011, 10:04
Great post!
By Hal Hovey,  Thu Apr 14 2011, 10:04
Thanks again for another timely and useful topic. I'll be showing this article to my newest buyers today!
By Tamara Schuster Broker, Agent,  Thu Apr 14 2011, 10:43
Tara, Very valuable information. I especially like your statement for BUYERS. " Buyers – it’s a must to make sure that your offer price for any given home falls within the range of what is affordable for you. This includes offering a price within the range for which your mortgage was preapproved, but also includes making sure that the monthly payment and cash you’ll need to close the deal (down payment + closing costs) are affordable in light of the particular house. If, for example, the property will require repairs for which you’ll need to conserve cash, or has HOA dues you hadn’t planned on." It is only a great deal if you can comfortably afford it.
By George J Donaldson Jr.,  Thu Apr 14 2011, 10:47
The idea of doing a list of comp sales of like properties within a reasonable time frame providing that there are comps are a very good way to go about listing or making an offer. However Trulia is not the place to go. Trulia is almost always wrong. The public should almost never use Trulia. Ask a real estate broker to do the comps based on the local MLS AND the county recorders record of sales. Using the county records takes in the sales (fsbos) not part of the MLS.
Geo. J. Donaldson Jr., CRB
Real Estate Broker 30+ years
By Moxa Chiu,  Thu Apr 14 2011, 10:47
Excellent work, Tara. May we have it on 2 separate posts, one for buyer and one for seller.
By Mary Davin,  Thu Apr 14 2011, 11:01
Reply to Ray Akers: I think the dual perspective style taken in this particular article is very interesting as it allows us to learn how both sellers' and buyers' issues affects the other. It's like having a side-by-side comparison all in one article. Saves space that way and still gets the information out. Nice tidy article.
By Max Sabo,  Thu Apr 14 2011, 11:01
Good points! I think that it is also necessary to considered how emotional the buyer is. If they aren't emotional and like 5 different homes it may make sense to start making low offers in order to find out who is motivated. This will result in a lower anchor which typically results in a lower purchase price for the buyer.
By Keith Bochner,  Thu Apr 14 2011, 11:05
Good stuff!
By Qing Hui Wang(Emily) Realtor,  Thu Apr 14 2011, 11:06
Very useful tools. I posted some of your articles on my FB. Thanks.
By Chase Craig,  Thu Apr 14 2011, 11:13
Interesting article.
By Charles Rosamond,  Thu Apr 14 2011, 12:08
Well, the last time I checked this is a complete buyers market....and, don't care what " the experts" try to say, a home is only worth what a buyer will pay for it....if you make a low-ball offer, trust me, if they REALLY want to sell, they will counter....just a game " to see how low they will go".....takes some patience and a whole bunch of "huevos".....
By Lejo Harmeson,  Thu Apr 14 2011, 12:24
Maybe try to use a good Realtor, who uses these five steps daily, instead of listening to a website that only has interest in gathering information and re-distributing for profit, whether it is accurate or not....
By Mditlove,  Thu Apr 14 2011, 13:52
How do you price your house if there are NO comps, I have a very modern house that looks half Frank Lloyd Wright/Half Mies Van der Rohe on two large lots on a lake front. There are no houses like it for miles around and none on a lakefront, let alone that are for sale or have sold. Specs are the same as others, 3br, 2 bath, 2600 sq. ft, etc.
??????
By Ted Crain - Local Expert,  Thu Apr 14 2011, 14:41
Good info I hope buyers will read. The term "Buyer's Market" doesn't apply to all markets. Some areas are recovering much faster than others. The advice I give my buyers is similar to what your article states.
By Aaron Evans,  Thu Apr 14 2011, 14:52
As a buyer, I'd like to hear about offers made on a property, but have never been offered it from a realtor, other than maybe a vague (this one had a deal that fell through for some reason.)
By Steven Zimmerman,  Thu Apr 14 2011, 15:44
a good read, but I don't know a seller that would want to hear you :(
By April Ortiz,  Thu Apr 14 2011, 16:44
Great Advice Tara! Buyers have a tendency to look at Active Listing Prices rather than Sold Prices because that data is more readily available to them. It's important for our Buyers to know the facts and get the best deal.
By Jasperthecat,  Thu Apr 14 2011, 17:27
Your data about the Monterey Peninsula CA (93950, 93940, 93955, 93921, etc.) is completely unrealistic as of April 2011. You need to explain how the average sales price for 93950 (900 - 950K ) is justified. Please do not mislead buyers or sellers in this area.
By P B,  Thu Apr 14 2011, 17:40
As a buyer I would add at least 3 additional factors that must be considered before putting in an offer:

(1) Houses prices are still trending down. Just about all independent analysts and economists believe prices will fall anywhere from 10% to 30% more. Using historic prices is a very bad idea if you are not also factoring in the likely future decline in price.

(2) Consider the INTRINSIC value of a house, not just a market price which gets distorted by bubbles and by artificial forms of stimulus like government provided mortgages and tax breaks. One way to assess intrinsic value is to see if there is a substitute that would provide similar value. Ask if renting a similar property would cost less per month than buying? If so, the price is too high. In a rational market the long run cost of renting should always be more than the long run cost of buying, especially since the buyer is taking on much more risk than the renter.

(3) Don't get too caught up in the monthly cost. Low interest rates may give you a low monthly cost today, but unless you are sure you are going to stay in your house for 30 years, you need to also consider that rates going up will itself push the prices of houses down because too many people link their monthly mortgage cost to what they are willing to pay, and in a higher interest rate market they will not be willing to pay as much. Also, monthly costs need to include taxes and maintenance, which are guaranteed to go up over time.

Resist pressure to base your offer on an emotional decision, and make an offer based on sound principals of value.
By Judith F. Mizzone,  Thu Apr 14 2011, 17:49
Great article, all realtors should follow this advice.
By Anthony Paganini,  Thu Apr 14 2011, 18:00
"the lower the LP:SP ratio, generally speaking, the less competition there is among buyers." This statement defies all logic!
By Jeff Smith,  Thu Apr 14 2011, 18:47
Tara,

nice job. Great to send to clients making offers.
By BLS,  Thu Apr 14 2011, 18:59
I am looking to buy a condo in South Florida, one I can rent, most have restrictions and don't allow you to rent the firts year. They are loosing so many prospective buyers with those rules. I am getting discouraged really.
By Barry T. Graziano, ABR, Mgr,  Thu Apr 14 2011, 19:00
Great Post, Thanks
By BLS,  Thu Apr 14 2011, 19:02
How can I find a condo in Broward county, tha allows renting the first year
By Lucky44,  Thu Apr 14 2011, 20:01
Enjoyed your article. Thank you, Richard. P.S. Are you married?
By Benny Jones,  Thu Apr 14 2011, 20:40
I have a question related to selling. How much would just the land go for say to developers? And I don't care what they do with the buildings and trees, etc as long as I can make enough to pay off my mortgage. Or better yet the government. If I sold a prime piece of real estate to TVA if they wanted to put a new electric grid through here? Why would I even consider selling the house if I didn't make enough on the deal to pay off what I owe on it? TVA has a substation not far from here. I'm pretty sure I could get them interested in buying my property. So then I would just need a realtor to sell the land. I could care less about selling the house itself. It's old and not worth selling. They can just knock it down. Along with the trees.
By Ron Peterson,  Thu Apr 14 2011, 20:46
Construction costs should be the lower bound on the price of a house. Houses will eventually need to be resold, so the houses have to meet the needs of an average family (at least 3 bedrooms) to have a reasonable market value. And bathroom count should be enough to meet the needs of a family that will be living there.
By Carol Gilles,  Fri Apr 15 2011, 00:09
Well said... I always feel that what the competition has done ... to create market value ...is one of the most steps in evaluating the asking price or the offer price.. Thanks!
By Rita Landem,  Fri Apr 15 2011, 05:09
Ray and George said it all. AMEN!
By Rita Landem,  Fri Apr 15 2011, 05:10
I said Ray and George said it all! Amen boys!
By Maureen Dunn,  Fri Apr 15 2011, 05:39
I especially liked #5. If you really like the home offer MORE than the asking price - within a range. In todays market Sellers are already priced low to sell ! That is something that HGTV doesn't get across to their viewers. Now buyers can read it from Trulia and get the home that they really want and maybe even listen to their agents advice :)
By Carol Bycel,  Fri Apr 15 2011, 06:00
Many of the questions sited, such as Comps and other offers, can only be answered by a Buyers Agent. If you are representing the Seller, you cannot provide that information.
By Gloria Laughton Allston,  Fri Apr 15 2011, 06:52
Thanks for the post Tara. These are excellent points for buyers, sellers AND AGENTS!
By Bashkii,  Fri Apr 15 2011, 21:52
Thanks for the post. You are almost always on the money but this one is a bit confusing as noted by other people here.
Also, a general advice that seems to be forgotten amidst all the "economics": Buy a property by its LOCATION VALUE!!! Better live in a cave in 5th avenue in NY than in a palace in the middle of nowhere!!! Donald Trump reminds us of that all the time!!
By Margarita Velasco,  Sat Apr 16 2011, 06:05
Thanks for your post. I will send it to my clients (seller and Buyers) it will be good advice for them. It is a confirmation of what I recommended them.
By Mary Ngati,  Sat Apr 16 2011, 10:32
As always Tara, helpful information, thank you.
By Mary Lewis,  Sat Apr 16 2011, 14:34
Good post, goes to the heart of the topic.
By John Walin,  Sat Apr 16 2011, 14:42
good post
By Joe Houghton,  Sat Apr 16 2011, 18:52
Great Post, I love how on top of and even ahead of the game you all have been staying. Solid information and thanks for emphasizing that the real estate is Hyper Local, this is so true!
By Sunshinelady752,  Sun Apr 17 2011, 00:58
Great information, will be needing it in the very near future. "THANKS"
By Jack Macioce,  Fri Apr 22 2011, 06:40
I definitely agree buyer's need to set their limit! There will always be seller's not willing to drop below a certain price, even if you show them the comps.
By DeeDee Riley,  Sun Apr 24 2011, 10:34
Tara, I think this is a great article as always from you. However, I have one correction and agree with Anthony Paganini in that the higher the LP:SP ratio the more competition among buyers not less competition among buyers.
By Team Albert - KW Port St Lucie,  Tue Apr 26 2011, 06:08
Tara,
Great article. We are allways telling sellers AND buyers to make sure to check comps. Buying and selling prices Do Not Come Out of Thin Air, or inspiration...they come from COMPS!

Thank you~
Debbie Albert
Keller Williams Treasure Coast
By www.SueSellsPinellas.com,  Tue Apr 26 2011, 06:08
A concise summary of what we constantly have to explain to our buyers/sellers! Thanks!
By Steve Morgan - (302) 541-5363,  Tue Apr 26 2011, 06:11
Good timing - I am dealing with a borrower using FHA financing - great article for me to share with him!

Steve Morgan
http://www.bethanybeachlender.com
By Stephanie Weiss,  Tue Apr 26 2011, 06:12
Maybe I misunderstood your comment:

"Work with your agent to understand the list price-to-sale price (LP:SP) ratio , which lets you know how much under or over the asking price properties are selling for in your target home’s neighborhood; the higher the LP:SP ratio, generally speaking, the less competition there is among buyers"

I would say the "higher" the LP:SP %, the "MORE" competition there is. If they are averaging "low" %, the competition is less.
By Richard OBrien,  Tue Apr 26 2011, 06:16
Great reading for buyers and sellers.
By Michael Kutni,  Tue Apr 26 2011, 06:21
This is great advise. I printed this and will give this to buyers to help them understand the process of buying.

Thanks

Mike
By Brenda Le,  Tue Apr 26 2011, 06:29
Great info & thank you for sharing. You should check out http://www.RealtorFaces.com and create a free profile there to share your info, services and doing business or just meeting other agents nationwide.

Ble
By Chris Powell,  Tue Apr 26 2011, 06:51
I like the topic, but I too think it is a little too contrived for the average buyer to process. Also, to add that since they have looked at homes on the internet for months, refined their lists, and then picked their home from the best of the best in their price range, then it is probably worth its listing price. And then apply the aforementioned LP:SP ratio to determine a probable sale price.
By Sarah Foley,  Tue Apr 26 2011, 06:59
Thanks for the article.
By Jorge Matos,  Tue Apr 26 2011, 07:03
Thanks for the post!
By Donna Kunzig,  Tue Apr 26 2011, 07:08
Loved the Price Reduction Map...thanks Tara!
By Stephen Kass,  Tue Apr 26 2011, 07:13
One word of caution for buyers looking at comps on their own. Don't compare REO distressed properties with owner occupied conventional listings. Make sure you are comparing apples too apples when searching out comps. A competent real estate agent will be aware of this and will be able to assit you in this process.
By Suzan Nanfeldt,  Tue Apr 26 2011, 07:30
I find this column vague, hard to follow and on certain points very WRONG. As a professional realtor I tell my buyers and sellers that there are three things that matter: Location, Condition, and Competition. Plus, how many price reductions a property has tells you nothing about what it is really worth (they may have started unrealistically high), what they expect, or how anxious they are. The motivation for a whole area or neighborhood being reflected on a chart? Utterly ludicrous.
By John Stapleton,  Tue Apr 26 2011, 07:44
Great post. To it I'll add:

Have an experienced Realtor and trust them.

Online "comps" are not as reliable as MLS data. A consumer looking at online info is not in any way comparable to a Realtor looking at the detailed data found in the MLS. Trying to do your Realtor's job for them distracts them from what they should be doing. Trust your Realtor, speak openly with your Realtor, and listen to the advice you are paying thousands of dollars to hear.

If you give your Realtor the freedom to do what they do best you'll get the best from them.
By Carrie Haymond, Broker,  Tue Apr 26 2011, 07:45
Tara thank you for letting us know what your thoughts are - I could hear your voice in the article. Our buyers do evaluate, our buyers are also very cautious and have for the most part watched their parents over spend.

Life evolves - we are on our own paths.
By Charles Rymal,  Tue Apr 26 2011, 07:45
In my market the question is how much over the list price should I offer? We have multiple offers on almost every turn key home under $300K and there are buyers waiting for a 4 bedroom home to come on the market in Northville/Novi MI. I even received 2 offers for 2 properties in Detroit yesterday! I have a conventional buyer 10% down no concessions offering $3-$5K over list price ($35K-$50K homes) getting beat out (3 times so far) by better offers! We need more inventory!!
By John Stapleton,  Tue Apr 26 2011, 07:46
Suzan, I agree. The price reduction map / chart probably tells one more about the pricing competence of the listing agents than anything else.
By Helen Chong,  Tue Apr 26 2011, 08:10
Trulia got some great tools! I am glad that you provide such valuable information for buyers and sellers.
By Mary Kay Young,  Tue Apr 26 2011, 08:11
Cannot Tweet this as the link is a mile too long and Twitter will not accept it. Really wanted to share!
By Mditlove,  Tue Apr 26 2011, 08:19
Sorry to disagree again, but comps are USELESS, when will realtors learn their own trade, I'll bet that the great majority of homes in the US are 3br, 2 baths on 1/4 acre. They're ALL THE SAME, what makes one home worth more than another are the differences, size of lot, LOCATION, proximity to shopping, in other words, the things that are really important in living somewhere. How about traffic noise, there is a home not far from my home that is right on the highway, cars and trucks go by all day long at 55 mph, can you imagine the din?.... yet the stupid realtor had called that a comp, you would not pay two cents for that home, regardless of the central air (which is bad in too many ways to discuss), the granite countertops which are nothing more than camouflage for bacteria, and the bathroom in the bedroom so that you can smell your own waste while lying in bed.... hopefully romantically.
Your criteria are all wrong and using your current ideas of comps is destroying your business.
By Beate McConkey,  Tue Apr 26 2011, 08:34
Some houses are unlike the other homes in the area, or they are located where there have been no recent sales, or a rapidly declining local market makes 6 month old data obsolete. So the best listing strategy in those instances is to have a seller-commissioned appraisal. Comps really only work in suburban subdivisions of like properties.
By Floridagreenhomes,  Tue Apr 26 2011, 08:56
Green homes are stand out from the others, and by buying home today, you need to think carefully about this issue. Besides I agree with Suzan Nanfeldt, that location, condition, and competition are three things that matter.
Guennadi Kisselev. http://www.mygreenhomeinflorida.com
By Shelhee Gal-Kossover,  Tue Apr 26 2011, 09:13
Great post. Thanks.
By Phill & Theresa Slocum,  Tue Apr 26 2011, 10:18
I would like to read more on the topic of Price Trend Analysis. Good information to pass on. Thank you.
By Donna,  Tue Apr 26 2011, 10:38
As a realtor in Fairfield County, I find this article is a little confusing since it addresses both buyers and sellers together which are two totally different types of clients. However, there are good points for both sides to think to remember. ..
By Trish,  Tue Apr 26 2011, 10:54
Buyers and Sellers should NEVER use 'comps' from Trulia or any other company to determine a sales price! Unless you are using comps from the same subdivision with the exact same homes, you are going to be WAY OFF BASE in pricing a home. Not all 3BR/2BA homes are created equal, but these online comps seem to 'think' they are. As a Real Estate Broker, I understand this (and so do my agents). Properties listed can be over priced (greedy sellers or inexperienced agents may have priced them). Also, buyers can be unrealistic about what a home's VALUE is (it is WORTH whatever someone is willing to pay for it). You can't really base a purchase price on what the home's value will be next month or next year...whether it is more OR less. The VALUE is what it is TODAY. This is why we rely on good appraisers (their jobs are TOUGH!). No one has a crystal ball...no one knows when the lowest point in the real estate market will be (we only know that AFTER the fact). Look at this realistically...get an experienced agent/company (agents are only as good as their Broker) to guide through this expensive process. This is the most expense item most of us will ever purchase, but don't buy more than you can afford...TODAY!
By Gus Pishue,  Tue Apr 26 2011, 11:02
Very nice post. Thank you.
By Kathy Ripps,  Tue Apr 26 2011, 12:09
All of the comments and posts are interesting and informative. I have enjoyed the article and the responses.
By Leonette Stafford,  Tue Apr 26 2011, 14:03
Great post. This is not only good for First Time Buyers, but for any buyer. This gives some common sence guide lines. Good Job. Leonette
By Tova Oren,  Tue Apr 26 2011, 14:44
If you are a seller or buyer and need the comparables and or name and phone number on of a good loan officer, Please visit my website http://www.tovaoren.com and e mail. I will provide the information for you.
By Cat Mayo,  Tue Apr 26 2011, 14:53
This is awesome information for my clients ~ thanks :)
By Nikki O'Rourke,  Tue Apr 26 2011, 15:35
Thanks Tara, really love your articles. I agree that providing a more thorough analysis of inventory and market trending based on factual data is helpful. In many areas of the Hawaii market we are experiencing very tight inventory and it is not unusual to see multiple offers among short sales, REO and just plain old non-distressed hot properties! It has been a hard reality for some buyers who may not have expected other buyers competing with them for the same "great" deal. This article is a reminder that the same considerations still apply.
By Doris Turner,  Tue Apr 26 2011, 16:30
Thank you Tara, as an ABR I appreciate your information for buyers. That said, I have to put in my two cents regarding comps. In my opinion comps have absolutely nothing to do with the value of a home. Comps are money driven and have partially led us into this real estate mess. Thank you also for the Price Reduction Map. This is awsome. Please keep up the good work supplying my clients with valuable information. Doris Turner, OK Realty, Inc. Bisbee, AZ
By Marvel - Jean Dahl,  Tue Apr 26 2011, 16:36
Good information for Buyers and Sellers
By Donna LaConte,  Tue Apr 26 2011, 16:58
Great Blog & I am definitely going to SHARE it on FB.... thanks!
By Donna LaConte,  Tue Apr 26 2011, 16:59
GREAT Blog & info for BOTH Buyers & Sellers......... I am definitely going to SHARE this on FB... Thanks! Donna
By John Crowe,  Tue Apr 26 2011, 20:07
Well, Trulia comps are tough in Texas as this is a non-disclosure state. Helpful information, though.
By Gail R. Buck,  Wed Apr 27 2011, 12:12
Thank you for this post
By James Trapasso,,  Thu Apr 28 2011, 13:21
Yeah bebe! Don't call me bebe!!!
By Fran Sakes,  Fri Apr 29 2011, 21:58
Response to Aaron Evans: The reason your buyer Realtor may be 'vague' about current and/or previous offers, is that this is 'priviledged' information shared only between the LISTING BROKER and his SELLER client. I.E.
if the listing agent told you/ or your agent that there was a previous offer at say: $250,000.00 which was accepted and the deal eventually fell through . Now you want to make an offer with knowledge of the previous offered price...the seller would now may be at a disadvantage of having that information used for perhaps a 'lower' offer, when in fact the home may be 'worth' the $250,000.00, or MORE. All offers have to be considered separately for their true-value of PRICE, TERMS, and CONDITIONS, and sometimes, Seller CONCESSIONS given to a buyer.

Each offer therefore, is unique and must be considered on it's own merit.

PS.....Tara should NOT have written in this article that say :***: What your agent can brief you on:

'The number of offers – if any - that have been presented on “your” property (which the listing agent will usually, gladly tell). If there are other offers, you’ll want to make a higher offer to compete successfully against them" ****** (you can say: we have had other offers: but CANNOT disclose the price,terms,conditions)
By Sharon Paul,  Thu May 5 2011, 13:27
Tara you are to be commended. All of the comments are very interesting; however, one thing jumps out like a PURPLE FROG - every market is different. I have been a Broker for over 30 years, and have held licenses in three different states. The market has always had up and down cycles. The secret is to maintain integrity and be honest with the client and true to yourself.

To PB in Princeton, what might apply in your market may not apply in the coastal areas of North Carolina, my market, or in Raleigh, an area that has seen the housing market increase not decrease. In an area where there is growth or where the majority of owner's don't NEED to sell, you can quote all the national economic data you like, and often the buyer can quote it for you; but if the local market doesn't fit that scenario, or the seller won't budge, you just have to take your little spreadsheets and trash 'em. But because every market is different it does reinforce the premise that buyers should be working with a Realtor.

Lastly, please tell me a "Realtor", as in someone who has sworn to uphold the Code of Ethics, didn't tell a buyer's agent what the accepted price was on a previous offer???? That is one major violation of trust of one's obligation to the seller.
By Brian Petrelli,  Sat May 7 2011, 07:17
Thanks for the post. Love your articles.
By Jen Butel,  Mon May 9 2011, 19:57
Thanks for posting Tara!
By Jane Grant,  Thu Jun 2 2011, 10:39
Recent Sold Comparables are the most important factor when deciding on what to pay for a home or what price to sell a home for. This is what Bank Appraisers use to state the value of a property!
By Voices Member,  Fri Jun 7 2013, 12:55
I have always found this to be a difficult predicament. You don't want to ask high or ask low... Great work, Tara!

David | http://www.bennyesquenazimd.com/afemcare/Welcome.html
By Voices Member,  Tue Jun 11 2013, 13:44
I always run into this issue so I made sure that I read and reread this article. Thanks, Tara!

David | http://www.storagekingarthur.com/storage-units-west-valley-city-utah/
By Voices Member,  Tue Jun 18 2013, 13:34
Excellent insights, I love your work. Keep up the great writing, Tara!

David | http://www.hamiltondentist.ca/orthodontics.html
By Voices Member,  Fri Jun 28 2013, 14:30
I usually ask too low but after reading this article- I have gained some confidence! Keep up the excellent work, Tara!

David | http://swartzremodelinghome.com/bathroomremodeling.html
By KCards,  Mon Dec 16 2013, 09:31
Good insight into how to develop a negotiation strategy. Check out my blog for some additional thoughts on this topic at http://real-estate-rehab.blogspot.com/2013/12/how-much-to-offer-when-submitting-real.html

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