Once you visit a home for sale, you can see how it compares in exterior features to other homes in the neighborhood. You can determine if it is better, worse or average for the other homes in the area. When evaluating the interior, you will want to take a look at the structural condition of the home. How are the ceilings, floors, walls, doors and windows. Are there obvious signs of damage or issues that need to be addressed? You will want to take a look at all the plumbing for leaks and check the electrical outlets and box make sure there are no signs of damage. A good home inspector will take a deeper look at all of this, but you want to at least factor and repairs or issues while you are evaluating the asking price.
Take a look at the paint and flooring. Are they worn or out of date? The same goes for the fixtures including lights, switches, door knobs and drawer handles. Will you need to replace those? How about the front and back yards. Is the landscaping similar level to those in the neighborhood? Is there any damage to fencing that might need to be replaced?
You will want to judge this against the condition of other properties on the market in the area - Same neighborhood if possible.
When comparing the home to other similar homes, you will want to factor in, to some degree, the improvements the homeowner has made to the property. Some improvements will add value more than others. Minor cosmetic improvements should be ignored for the most part. However, improvements such as room additions, kitchen remodels and some types of flooring upgrades should be considered. There are some improvements such as swimming pools that should be factored in but at a reduced rate as they do not add their full value to the improvement of the home. Rely on use to give you guidence in this area.
The market conditions in your area can also determine the asking price of a home. If we are in a seller's market where there are less homes available for purchase than buyers, properties can sell quickly and may receive multiple offers. The asking price can be higher because the demand is higher. The final sales price can even be higher than the sales price. Buyers are often tempted to submit an offer lower than the asking price. But in this type of market, you could find yourself outbid for the home if your offer is too low.
A buyer's market is when there are more properties available than buyers. In this type of market offers are fewer and further between. A buyer can normally submit a lower price than the asking price. The seller can always counter the offer and begin negotiations for the property.
Most of the time the market is either steady or in transition. In a steady market, the normal rules for the market conditions do not really apply. You could see a home sit on the market for months while another home lasts only days and receives multiple offers. Similarly, in a transition market tends to be all over the place but with a slight majority leaning toward one end of the spectrum or the other depending on which way the market is heading.
It's not often that it happens, but every once in a while you will see a seller that is willing to sell at a lower price than they had wanted to because of another situation. A motivated seller could be someone who has already purchased another home and needs to sell the older home so as not to carry two mortgages. A motivated seller could also be someone who has to sell to deal with personal family issues such as divorce or any number of family crises.
Sometimes the words Motivated Seller in a listing is nothing more than a tactic to generate more inquiries about the property. However, there are situations where the seller is actually under the gun to sell their property and is willing to sell for a few thousand dollars less and get out from under the property.
After determining the base price range from comparable sales, you can use the conditions of the home, market, improvements and the sellers motivation level to gain a better evaluation of the asking price and determine your offer. We are more than happy to provide you with professional guidance in this area.
Next: Step 6 - The Offer