Buying a first home...what's a good offer
Hey y'all. I'm so excited about getting my first home and i was wondering what i good offer is??? Does any of you well learned estate gurus know what a reasonable offer is?? I'm looking at a condo going for ~$200,000. I was thinking of make an offer of 180K for it. Does this seem reasonable?Is there some calculator i use ex. offer< or=90% of listed price etc.
It's impossible to know. What are condos in that building and area selling for? If the average condo is selling for 200k, I don't think 180 is a bad first offer with the idea you'll likely go for 190-194. But, are you in an area with multiple bids? How long has it been on the market? if it's been there for 2 days and you want to go in at 180 the sellers may just reject it thinking they'll get a better offer.
If it's been there for 2 months, then you might be good.
I would recommend getting a buyers agent (you don't pay them, the seller does) who can not only look for condos for you, but can do the market analysis you need to get the property you want at a good price.
Also is it okay to work with multiple realtors at once or is that an unethical thing to do??
Here is a process that works for many.
Find out actual & recent selling prices vs assessment values in your area.
Your realtor knows this important ratio is derived from:
Actual Selling Price/Assessed Value = the Ratio
This is a valuable and dynamic "current indicator" he can now follow the changes as they occur in his area.
That ratio if you know it, gives you a tool for buying and selling in your area that everyone can understand.
In a market when no one know what the real price is they use the assessment value as an anchor point and an unbiased point of reference.
Your transaction $ should be in line with that ratio.
Your offer slightly below, your actual transaction should be at or better than the ratio.
I provided extensive input on 3 RE transactions in the last 4 months. Dissimilar & in very different markets the transactions were conducted promptly to everyones satisfaction. The ratio had a lot to do with it.
People have an innate desire to behave "consistently" and a strong urge to find common ground in negotiation. I believe parties with divergent interests can effectively come together on price anytime and feel comfortable doing it.
This approach simplifies but does not oversimplify a very complex problem.
It is also very useful for focusing everyones attention and avoiding common errors. Very "doable" RE deals are notorious for going off-track unnecessarily.
By turning the problem into a process, it's not a problem anymore.
FeeOnly's advice is good, but I believe there can be an inherent bias in the 'ratio'
In Calgary, City performed property assessments are actually BASED on sale prices of comparable units (comparable in terms of location, size, upgrades etc). So actual sale prices and assessment prices are linked.
A ratio we used when putting an offer in was actually the (sale price)/(listing price) of comparable units (location build quality etc). This gives you an idea of what the market has been doing over a set amount of time.
How we got this info was asked our realtor to pull all the sales in the community incl. MLS listing histories (i.e. have the listing prices changed up or down over the past few weeks/months) and the final sale price. Since we are in a duplex, and they are relatively rare in our community, I also asked our realtor to pull duplexes in neighboring communities for the same info.
This gave us an idea of how much variation between asking and final sale price - in our community at the time, sale prices were about 95-98% listing price. So our initial offer was about 90% and we settled at about 93-94%.
This is almost exactly the same as what FeeOnly describes, however you need to know if the assesment price is accurate. In our case it wasn't. The assessed value was nearly 20% higher than what the market value was.
That's is precisely what the common ratio of around 0.80 revealed. Actual selling prices where 0.8% of the assessed value (prior year).
Originally Posted by Sampson
Taking the attitude that people are slow to lower expectations we approached buying at a 20% discount to asking, and selling at a 20% discount to last years assesd value.
Just remember that you can always go up in price, but going down if you offer too much to begin with isn't an option!
It obviously depends on prevailing market conditions and how much of an emotional attachment you have to the house in question. Best results come from putting both of those in your favour.
If using the ratio of sell price to list price, watch out for greasy realtors who will cancel a listing and redo it at a lower price, rather than amending the price. This will impact the ratio unless you catch the old listing with the true original price.
At the end of the day, a house is worth what you're willing to pay for it.
I wouldn't be against using different brokers. BUT, if you ever want to make an offer on a house they'll make you sign an exclusive agreement with them (it's how they get paid) which will mean you'll be stuck with one. So why not just use one who you trust and you can deal with.
Originally Posted by KanyEast
And you will be stuck with them for a fixed period of time (something like 120 days). So if that offers falls through and you purchase a property (same property or any other property) with another agent and the first agent finds out, you'll be forced to pay the first agent commission. (Unless the first agent lets you out of your agreement.)
Originally Posted by iherald
Also make sure to negotiate with your realtor. They understand competition is rough and many are willing to 'return' some of their commissions to you upon closing.