The search is finally over – you’ve found your dream home in your dream community. You’re ready to put in an offer but, like most people, you don’t want to overpay. How do you know if the price is too much or too little?
Knowing and determining the right buying price for your home can be as daunting as the home search itself, but it doesn’t have to be. Ask yourself these questions to figure out what your initial offer should be.
What is the market value of the home?
Market value is a price range (i.e. $400,000 – $450,000) of what a buyer is willing to pay for a home. If you purchase on the lower end you’re getting a great deal; on the higher end, top dollar. Where you end up in that range is back on market conditions, comparable home sales in the neighborhood, the motivation of both the buyer and seller, and financial preference. Another factor is the status of the current market. This is determined by comparing the sale price to the list price and amount of time on the market. The result of all these factors is the final price agreed upon by the buyer and seller.
What about the comps?
The most crucial step in determining a home’s asking price is analyzing the comparative sales, or comps, of all listings sold in the past six months in your desired neighborhood. Comps are a good baseline determine value, but each home’s value will vary based on condition, size, age, and other factors.
Keep in mind that true market value only applies to sold homes. A listing only takes into account the perceived value of the home by the seller, not what you’re willing to pay.
Is the list price in line with the comps?
If you’ve done your research and analysis, then you’ve come up with a price you’re willing to pay that ideally matches up with the selling price. However, there are instances where your prices may differ. The seller could have priced the home lower than market value to entertain multiple offers. Or the seller could be pressing their luck to how much they can get for the home. While it can offer insight and help determine your initial offer, don’t think the seller’s motivation or strategy.
Are you looking at the details?
It’s easy to get carried away when touring your potential new home. Remember to take note of any upgrades improvements that may be needed, such as the HVAC unit, water heater, and appliances. These are items that usually are not negotiable after the home inspection, so fact in repair or replacement costs when making your initial offer.
If you’re looking to move into the home of your dreams in an imaginative community, look no further than Summer. Lake! We have a variety of homes for sale that is just waiting for you to move in. Visit our Model Court, featuring three brand new homes from three of Richmond’s premier buildings. For more information about available homes and the Summer Lake community, visit our website or call 804-790-1950 today!
Sources
https://www.thebalance.com/price-range-for-buying-a-house-1798238
https://www.investopedia.com/articles/mortgages-real-estate/08/fair-price-on-home.asp
