Creating the perfect real estate purchase offer
From InmanWiki
Deciding how much to offer a seller for a home you'd love to own is rarely easy. Ideally, your offer price should not be above what you think the property is worth or what you can afford, but tempting enough to the seller that he can't refuse to accept.
Arriving at that perfect offer price is harder in some markets than others, and it depends on a lot of factors that are beyond your control. For example, in buyers' markets where there is a lot of inventory, you may find more realistic sellers who understand that they need to be flexible if they want to sell. In sellers' markets where there are more buyers than sellers, you may have no choice but to offer more than the asking price if you hope to be the successful bidder.
The first step to arriving at an effective offer price is to find out how much properties similar to the one you're interested in have been selling for recently. Look at the relationship between the list and sale prices of each listing. Did they sell for more or less than the asking price? How long did it take them to sell? Your real estate agent can provide you with this information. Ask for a Comparative or Competitive Market Analysis (CMA) for the listing in question.
Then ask your agent to talk to the listing agent and find out how much attention the listing is receiving. Are there any other buyers serious about writing offers? If so, you'll have to offer more than you will if there is no other serious interest.
How much you need to offer to pique the seller's interest will depend a lot on how long the listing has been on the market. A seller may snub a less-than-asking-price offer if the listing is new on the market. However, if the listing is weeks old and there are plenty of new listings coming on the market each week, you may be successful with an offer for less than asking.
How much a seller will negotiate usually depends on several factors: how long the property has been on the market, whether the seller is motivated (that is, he really needs rather than just wants to sell) and how realistic the seller is about the current value of his home.
HOUSE HUNTING TIP: You can save yourself a lot of time and aggravation by asking your agent to have a heart-to-heart talk with the listing agent before you make an offer, particularly if you intend to offer significantly less than the list price. If the seller is adamant about his price, and there are plenty of other similar listings on the market, devote your energies to a seller who is willing to sell at market value.
Some buyers wonder if they should pay over asking in a strong market that could lose steam over the next year as interest rates rise. That depends on how the listing is priced. If it's priced below market value, it could attract multiple offers. If the property will suit your long-term needs, it may be reasonable to pay more than the list price as long as it's not more than you can afford now and for the long term. You won't lose money unless you have to sell during a down market.
Don't be afraid to negotiate if you're not in competition. Some motivated sellers still can't resist trying for a higher price. Several rounds of counteroffers back and forth could bring about a successful conclusion.
THE CLOSING: But, promise yourself to walk away if the seller doesn't see the light.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
Copyright 2006 Dian Hymer
Retrieved from "http://www.inmanwiki.com/Real-Estate/Creating_the_perfect_real_estate_purchase_offer"
It's a "Buyers Market!"
Are you one of those buyers that has seen all the media and bad press in 2007 & 08 about how bad the Detroit Metropolitan real estate market is?
It's amazing at how values dropping makes some claim that the current market is a bad market. What it is, is a "Buyers Market." It is a market where if you pay attention long enough and sit on the sidelines, you will witness first hand how there was a shift in wealth during this time and how those that acted and purchased property today, (those that took advantage of the depressed values) together with leveraged money at low interest rates created real wealth.
Let me ask you... when stock prices go down, (is it time to buy or time to sell?) IF you were in it for the short term, you may say sell. Almost any investor however should weigh the risks and generally speaking, those that made the real money in the end were the ones that looked at it as an investment for the long term. Those that rode the waves and as they say: "Bought low and sold high!" Real Estate should always be treated as a long term investment. You cannot really buy, sell and trade it like you would a stock anyway. Real property can take months in any market to move, (even in a sellers market) it could take 90 days to put your cash in your hands. Where a stock may be bought and or sold in a matter of minutes.
With all that said, if you are a buyer in the Oakland County real estate market, you will need a team of experts to represent you. A team such as (A knowledgeable Realtor, a financial planner and your funding sources.) Together, your team members can take you through which properties make sense and which do not make sense to add to your portfolio. Together, your strategy can be assembled: (Acquire, improve & Flip) OR, (Acquire, improve and hold.) Will you use a strategy to acquire Bank owned properties (REO's) or buy homes from private homeowners that are being offered on the open market? How will you evaluate these properties when they are found? Your Realtor & team member can help and there is no cost to you for buyer representation which is now in effect in Michigan. Your agent will explain the benefit's of "Buyer Agency" at your first meeting. There is typically no cost to you for this service as the buyers broker is compensated by the listing broker so its a win-win for you (the buyer.)
Values have dropped 15-25 & 30% over the past few years. Do you know that in some cases it took these sellers 5 to 10 years to achieve this type of equity position in their homes? Did you know that interest rates have almost never been lower than they are right now? Did you know that if you just bought one additional property and held onto it as an investment (if properly managed) your tenant could pay it off in just 22 years and could double or triple most peoples retirement portfolio?
Are you a seller that is a bit depressed by the fact that your home is not selling for as much as you would have expected it to or would have hoped for? ***If you are buying up and buying a more expensive home, chances are good that the loss in value that you have seen on your home will be more than offset by the loss in value of the home you purchase. (Even your principle residence should be looked at as an investment.) In many cases, it's a persons largest investment. A good financial planner can guide you properly towards your financial goals.
Will you be one of those that sat on the sidelines and watched this dramatic shift in wealth take place, OR will you be one of the ones who took action? This shift will take place with or without you.
Contact me today and let's get started with an entire team of professionals!
It's amazing at how values dropping makes some claim that the current market is a bad market. What it is, is a "Buyers Market." It is a market where if you pay attention long enough and sit on the sidelines, you will witness first hand how there was a shift in wealth during this time and how those that acted and purchased property today, (those that took advantage of the depressed values) together with leveraged money at low interest rates created real wealth.
Let me ask you... when stock prices go down, (is it time to buy or time to sell?) IF you were in it for the short term, you may say sell. Almost any investor however should weigh the risks and generally speaking, those that made the real money in the end were the ones that looked at it as an investment for the long term. Those that rode the waves and as they say: "Bought low and sold high!" Real Estate should always be treated as a long term investment. You cannot really buy, sell and trade it like you would a stock anyway. Real property can take months in any market to move, (even in a sellers market) it could take 90 days to put your cash in your hands. Where a stock may be bought and or sold in a matter of minutes.
With all that said, if you are a buyer in the Oakland County real estate market, you will need a team of experts to represent you. A team such as (A knowledgeable Realtor, a financial planner and your funding sources.) Together, your team members can take you through which properties make sense and which do not make sense to add to your portfolio. Together, your strategy can be assembled: (Acquire, improve & Flip) OR, (Acquire, improve and hold.) Will you use a strategy to acquire Bank owned properties (REO's) or buy homes from private homeowners that are being offered on the open market? How will you evaluate these properties when they are found? Your Realtor & team member can help and there is no cost to you for buyer representation which is now in effect in Michigan. Your agent will explain the benefit's of "Buyer Agency" at your first meeting. There is typically no cost to you for this service as the buyers broker is compensated by the listing broker so its a win-win for you (the buyer.)
Values have dropped 15-25 & 30% over the past few years. Do you know that in some cases it took these sellers 5 to 10 years to achieve this type of equity position in their homes? Did you know that interest rates have almost never been lower than they are right now? Did you know that if you just bought one additional property and held onto it as an investment (if properly managed) your tenant could pay it off in just 22 years and could double or triple most peoples retirement portfolio?
Are you a seller that is a bit depressed by the fact that your home is not selling for as much as you would have expected it to or would have hoped for? ***If you are buying up and buying a more expensive home, chances are good that the loss in value that you have seen on your home will be more than offset by the loss in value of the home you purchase. (Even your principle residence should be looked at as an investment.) In many cases, it's a persons largest investment. A good financial planner can guide you properly towards your financial goals.
Will you be one of those that sat on the sidelines and watched this dramatic shift in wealth take place, OR will you be one of the ones who took action? This shift will take place with or without you.
Contact me today and let's get started with an entire team of professionals!
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