Tuesday Dec 29 2009
The Real McCoy: Should buyer bide time for better deal?
By: Kari McCoy
Dear Kari: We are finally ready to buy a home and we want the best deal. Some friends of ours just bought a home and they paid full price after the home was on the market for three months. We have waited a long time to buy a home and we want the best price. What should we do? Answer: Buying a home is a major event, both emotionally and financially. It will usually affect your finances more likely than any other investment. On the emotional side, you are determining where you will live for the next several years, if not the rest of your life. You and your Realtor have been house hunting for several weeks, looking at tons of homes for sale. This process helps you, the buyer, to understand what the real estate market has to offer in your approved price range. Then suddenly your dream home appears. This is very exciting. Next, the buyers frequently ask their Realtor what she or he thinks the initial offer price should be. When you are preparing your offer, you already know the seller’s asking price. However, more research of the seller’s situation could prove to be helpful in determining the best offer price. The seller’s motivations may be a key factor, such as job transfer, buying another home, divorce, seller retiring, etc. All this information can be useful. For example, a seller just received a job transfer out of state and wants his family to join him immediately. If the buyer could be flexible with a quick close of escrow, then that seller may take a lesser price than they normally would have. Please be aware if you offer too low, the seller may be insulted and respond with an impossible counter offer ... or not respond at all. This is a thin line unless you are willing to walk away from the home completely and find another home. The idea is to always keep the ball rolling, by having counter offers going back and forth with the seller and buyer no matter how small the changes may be. Please know that there is a large possibility that the seller’s emotional attachment to the home may be a factor. These emotions may apply even if you are working with a track subdivision home rather than a custom home. The key is to try and figure out the amount that is slightly less than what the seller was hoping to get, but close enough that he may get nervous about losing a possible strong offer. Ask your Realtor to provide you with a current CMA (Comparable Market Analysis) on similar homes near the neighborhood, which have recently sold, and also the pending sales. A pending sale means that there is an accepted offer on a home but there may be contingencies not completed and the property has not passed title to the new owner. Therefore the agreed upon sale price will not be disclosed until the home closes escrow. This protects the seller in the event the pending sale is not completed and the home needs to go back on the market. Your Realtor will locate this CMA information through the local MLS (Multiple Listing Service). The MLS service has most all the data of all the homes for sale, homes sold, pending sale homes, expired homes and off-the-market homes. If for some reason a particular home was not found in the MLS, your Realtor can obtain the information through the county recorder’s office. Once you and your Realtor have gathered all the information, she or he will help you make comparisons. A few comparisons may be price of other sold homes, condition of the home, age, square footage, location, views, size of yard, upgrades, improvements, location flaws, work needed, etc. You and your Realtor will need to also take into consideration the current market trends and competition of other homes for sale in the area. Then the buyer must figure out the terms and what price you are willing to pay for the home. Your real estate agent’s job is to negotiate a lower than asking price and terms which would make you happy. Yet, if you are willing to pay market value or a few thousand dollars over market value or if you are only willing to pay a set amount and then walk away from the selected home, please tell your Realtor. This information will help with their negotiation tactic and strategies. While your Realtor can advise you and provide you the necessary data, the ultimate decision on what you offer is yours. Kari McCoy has been a Realtor for 25 years and owns the Kari McCoy Group, Residential Real Estate, at Coldwell Banker. She can be reached at 941-9540, firstname.lastname@example.org or at Karimccoy.com.