Because your Realtor may be reluctant to give you the price you should offer when buying a home. It is always helpful to find out why the seller is selling. You may not be able to obtain this information because the listing agent may refuse to tell you. But you can gather information without relying on the listing agent. You should realize that none of the following alone is sufficient by its self, each used in conjunction with the others will help you make the decision on which price is best for you to offer on DFW Homes.
Determine the Market in the Area You Want to Buy in
Check the activity of the marketplace. It is it neutral, hot or cold? If you're making an offer in a buyer's market on one of many Highland Parks homes, for example, you will have less competition for the home. Sellers will be more likely to be open to any offer because there are fewer buyers. If you're buying Collin County real estate in a seller's market, sellers may not consider any offer that is less than full price. Sellers could receive multiple offers, which means your offer should be as attractive as possible to get it acceptance.
Find Out How Much the Seller Paid for the Home
While it is true that in most cases the price the seller originally paid for their house has very little bearing on its market value today. However, if the seller purchased only a few years ago in a depreciating market, the asking price should be closer to the seller's purchase price or they may not accept it. Although you may not be able to determine the condition of the house when the seller bought it, nor whether there were any extenuating circumstances, you can adjust for an increase due to appreciation and improvements the seller has made.
Determine What The Seller's Mortgage Balance is
Unless the seller is in default on their mortgage and are willing to participate in short selling their house they are unlikely to accept an offer for less the amount of their mortgage(s), plus selling cost. If the seller has a high mortgage balance, and the house is vacant, you may assume the seller is making their mortgage payments out of their pocket, probably paying on two homes. If the mortgage balance is very low, the seller might not be as motivated to sell immediately and can afford to wait to get their list price.
Examine Comparable Home Sales
When looking at comparable home sales use only the homes that are similar in square feet, age and location to the home you want to buy. Use the data from the most recently sold sales, and don't look back more than six months because appraisers won't.
Analyze List and Compare Price to Sales Price Ratios
Ask your DFW Realtor for a trending report covering the last six months. Look up the prices of the homes as they were listed and compare them to the prices that have sold. Ask how much is the spread? Are houses selling at, over or under list price? If under list price, by what percentage? If many properties are selling at 3% under the list price, for example, that percentage could indicate the price the seller will or should accept.
Check Square Foot Cost Averages
Understand that smaller homes are priced higher per square foot and larger homes are priced less per square foot. You generally cannot take the average square foot cost and multiple it by the square footage of the house you want to buy and come up with a good offer price. However, you can check the trends to determine if the square foot cost averages are rising or declining and you can use that information to your advantage.
Ask for the Home's History and Days on Market (DOM)
At times, Realtors take listings off the market and re-enter them as a new listing. Find out if the home was an expired or cancelled listing and then relisted. The DOM is important, because if properties have been on the market for more than 30 days, the sellers may be more motivated to negotiate. Don't become emotionally attached to the home before your offer is accepted. Prepare yourself for the sellers to counter your offer. Keep other homes in mind just in case your offer is not accepted by the seller.
