Since you have toured the property you are interested in, you should know how it compares to the general neighborhood. All you have to do is put the home in one of three categories - average, above average, or below average. If you are buying for the first time, you may not realize that you also need to pay close attention to the list of comparables provided by your realtor. If you don’t have such a list, ask for one. Also, find out how the homes in the same neighborhood are faring in terms of value and sales prices. You can often find this information online, or ask your realtor to share this kind of information with you.
1. How Property Condition Affects Your Offer
When evaluating a home’s condition, there are a number of things you should consider:
- The Roof: The roof is one of the first things that you can assess about a home’s condition. If the roof is in very poor condition, it will be immediately obvious to most people.
- The Windows: Windows are an expensive update. Therefore, if a home desperately needs new windows, it is important to figure the replacement cost.
- The Kitchen: Most buyers are looking for a large, spacious, up-to-date kitchen with the latest conveniences. In very few cases, a home’s kitchen is considered only slightly. In most cases, when you want to buy a home with resale value, look for a home with a great kitchen. Spacious kitchens can be updated to increase the home’s resale value, but kitchen renovations are expensive.
- Fireplaces: Fireplaces are a common feature of family rooms and sometimes living rooms. A family room with any kind of fireplace is attractive to buyers, but a living room fireplace is not going to add much to the resale value.
- Garages: Most families used to have just one car. In contrast, today’s families generally have one car for each adult and often even a third car for older teens. Therefore, homes that have limited parking areas are less desirable and have a lower resale value.
- Location of the Laundry Area: Today’s families are busy and prefer the convenience of having the laundry room on the main floor.
- Water Damage: Water damage anywhere in a home is probably one of the biggest resale-value killers. Visible water damage, no matter how long it has been there, can be a sign of environmental hazards such as mold and mildew.
2. How Home Improvements Affect Your Offer Price
Even when comparing exact model matches within a tract of homes, you should note whether the previous owners have made any substantial improvements. Cosmetic changes should be largely ignored, but major improvements should be taken into account. Most important would be room additions, especially bedrooms and bathrooms. Other items, like expensive floor tile or swimming pools should be taken into account, too, but should be discounted.
3. How Market Conditions Affect Your Offer Price
A hot market is a "seller’s market." During a seller’s market, properties can sell within a few days of being listed and there are often multiple offers. Sometimes homes even sell above the asking price.
A slow market is a "buyer’s market". During a buyer’s market properties may languish on the market for some time and offers may be few and far between. Prices may even decline temporarily. Such a market would allow you to be more flexible in offering a lower price for the home.
4. How Seller Motivation Affects Your Offer Price
The most common "motivated seller" is someone who has already bought his or her next home or is relocating to a new area. They will be under pressure to sell the home quickly or face the prospect of making two mortgage payments at the same time.
There are also family crises that can motivate a seller to make a quick deal. However, when you see a real estate ad that mentions "divorce," "motivated seller," "relocation," or something to that affect, beware. Although the facts may be true, that does not necessarily mean the seller is motivated to make a quick and costly sale. Most likely, the ad is more designed to generate phone calls and leads rather than sell the home.
5. 14 Closer inspection things Affects Your Offer Price
- Visit at various times of day
- Look through recent online news or newspaper archives
- Talk to neighbors
- Ask if the neighborhood has an association
- Get a home inspection
- Get detailed records on past improvements
- Quiz the sellers
- Don’t just assume remodeling will be a snap
- Consider the view
- Ask for utility bills
- Pay close attention to taxes
- Check with city hall
- Reconsider the bells and whistles
- Explore the surrounding area
