Know the Market before You Buy
The asking prices of most homes on the market indicate the current state of the market, and should generally be within a very close range to the prices for which other similar homes in the area have recently sold. In deciding upon a selling price, a home-seller must establish a balance between the desire to draw the highest offer and finding a price that will be reasonable enough to attract an appropriate pool of prospects, and competitive offers. While most selling agents counsel their clients to consider this equation when pricing their home, keep in mind that some homes are not properly priced.
It’s important to educate yourself about the current market before approaching the purchase of a home. The market will always influence a property’s value, regardless of the state of a home, or its desirability. Here are the types of market conditions and how they may affect you:
A seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply—that is, when the number of buyers exceeds the number of homes on the market. As a result, these homes usually sell very quickly, and there are often multiple offers that come in very quickly from the time the property is listed. Time is always the essence, and it could just be a matter of getting your offer in before other buyers that secures the property for you. As a buyer, you need to consider that many homes will sell above the asking price; in other words, you may have less room to negotiate given these competing offers.
Though most buyers want to get a home for the lowest price possible, reducing your offer could mean opening the door for another buyer instead. Additionally we recommend that you take into consideration the minimal effect that a slightly higher offer would have on your overall payment. If you believe the property is poised for further appreciation over the long term, slightly overbidding might secure the purchase against other buyers. Nearly every property owner has a story of the home they could have purchased years ago for far less than its eventual value.
A buyer’s market is a slower market. This type of market occurs when supply is greater than demand, the number of homes exceeding the number of buyers. Properties are more likely to stay on the market for a longer period of time. Fewer offers will come in, and with less frequency. Prices may even decline during this period. As a buyer, you will have more selection and flexibility in terms of negotiating toward a lower price. Even if your initial offered price is too low, the seller will be more likely to come back with a counter-offer, so you can begin the process of negotiation. We are highly skilled at ascertaining key factors that will give us an educated starting point. Although there are no guarantees to any outcome, Lux-RE-Homes agents have a strong track record for securing purchases at strong discounts when the motivation of the sellers is in line. Our objective is to work to secure the best deal for our client while not losing the property to another buyer.
In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of buyers. When a market is balanced there aren’t any concrete rules guiding whether you should make an offer at the higher end of your range, or the lower end. Prices will be stable, and homes will sell within a reasonable period of time. You will have a decent number of homes to choose from, and may encounter some competition for offers on the home of your choice, or none at all.
Before you make an offer to purchase a home, establish whether the current market is a Buyer’s, Seller’s, or Balanced market. Also, evaluate the price similar properties have sold for in the area, and the length of time these properties spent on the market. Determine how the home you’re considering compares to these other sales. Is this one over-priced, under-priced, or a fair price? By establishing this information prior to making an offer, you will be in a position to negotiate the best price for the home and be prepared for any additional opportunities that may come your way.
Keep in mind, Lux-RE-Homes agents are trained to provide clients with this information about the market, helping you make the most informed decision possible. We will guide you through the ups and downs of the market and keep you up-to-date with the types of changes you might expect. These realtor resources and connections will prove to be invaluable as you navigate the real estate market.
The other main factors that affect market value are:
Highly desirable locations such as Coastal Properties, of properties located in premier communities and neighborhood have a strong effect on value. Secondarily, proximity of the home to amenities, such as schools, parks, public transportation, and stores will affect its status on the market. Also, the quality of neighborhood planning, and future plans for development and zoning can influence a home’s current market value, as well as the ways in which it might change.
The age, size, layout, style, and quality of construction of the building will all affect a property’s market value, as well as the size, shape, seclusion and landscaping of the yard.
This includes the general condition of the home’s main systems, such as the furnace, central air, electrical system, etc., as well as the appearance and condition of the fixtures, the floor plan of the house, and its first appearances.
Examine the selling and asking prices of similar homes in the neighborhood. Ask us to prepare you a general market analysis of the neighborhood you’re interested in, so you can determine a range of value for a particular property. A market analysis will provide you with a market overview and give you a glimpse at what other similar properties have been selling for in that area.
The market value of a home is additionally affected by the number of homes currently on the market, the number of people looking to buy property, current mortgage rates, and the condition of the national and local economy.