How to Determine Your Offer Price

 

Last week we reviewed 5 questions to help you know if you’re ready to make an offer on a property.  If you missed that article, you can see it on our blog at WeSellLeduc.com.  Once you know you’re ready, the next question always is, “How much do we offer?” Today we’re talking about 5 key factors that will help you determine your offer price.

 

  1. Comparable properties. Before writing an offer, it’s wise to have your Realtor perform a CMA (Comparative Market Analysis) to confirm what comparable properties are selling for in the neighborhood. This will help you determine a fair purchase price to settle on, however that doesn’t necessarily equate your offer price.  After receiving their Realtor’s advice, some buyers will set their offer price at 2-5% less than their expected purchase price. Others will offer what they’re willing to buy the property at. It becomes a one-time offer where the seller can choose to accept it, counter it, or reject it. We also see a smaller pocket of buyers who will offer a much lower price. A low offer can be justified when the property is listed higher than market value. However, when a property is already listed at a fair price, you risk the seller(s) not wanting to work with your offer at all when you offer too low.

 

  1. How many other properties meet your criteria? With a lot of competition, we experience a ‘buyer’s market’, which allows you to offer less. Keep in mind there are likely many other buyers in the market with a similar search criterion, especially when you’re looking within a lower to mid-price range. Currently in our market, the competition is stronger with those detached properties priced under $400,000 compared to those priced higher than $450,000.

 

  1. Days on market. If a property is new to the market, it’s unlikely the seller will negotiate a lot from their asking price.  From a seller’s perspective, they’ve probably had a fair number of showings, and they simply aren’t that motivated yet. On the other hand, when a property has been for sale for 3 months or more, motivation tends to increase. This is particularly true as showings become less frequent the longer a property has been on the market.

 

  1. Price reductions. If a motivated seller hasn’t sold their property in the first 30-60 days, they’ll likely consider reducing their list price. With a new price, comes exposure to new buyers, which means there could be increased competition. In this case, if the property is now at or below market value, we’d advise against offering too low of a price.

 

  1. Knowing a seller’s motivation is a strong indicator of how much to offer. This is one of the reasons why as professional Realtors we are to keep all personal information confidential. As a buyer, if you discover the sellers are going through a divorce or financial hardship, you may be inclined to offer less because you know their motivation is very high. This is also true for a relocation or if they’ve already bought another property. If on the other hand, the sellers are thinking about upgrading, but only if they get the right price, then you can clearly see the motivation is much less.

 

You can be assured that when you have a professional, integrity driven Realtor working for you, he or she will do everything in their power to help you achieve the best price on your future home.  Our community has many great realtors to choose from. If you don’t already have one, feel free to contact us today.

 

Jason Rustand with RE/MAX Real Estate serves with the highest level of integrity and excellence every time. For more info on this topic or others related to real estate, LIKE our Jason Rustand Team Facebook page, call us direct at 780-980-2828, email jrteam@shaw.ca or visit WeSellLeduc.com


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