Using comparables: How much should I offer?
When you’re looking at how much to offer for a home the first thing your REALTOR should do is pull comparables. Comparables are similar properties that have sold within a particular area during the last 6 months. HOWEVER, you can’t just use any home as a comparable. It must be as similar as possible to the subject property (i.e., the property that you’re considering purchasing).
As such, if you’re looking to buy a 3 bedroom 2 bath home with 2,000 square feet built in 2005, I WOULD NOT use a 3 bedroom, 1 bath home with 2,000 square feet built in 1986. I know it’s common sense but I’ve seen it done. Do you see what I’m hinting at??
While anyone can manipulate the numbers to match what one REALLY wants to offer, that’s not going to do you any good! The purpose for pulling comparables is to see the average market price to help you strategically set the amount you’re offering.
Recently I’ve seen people making “low-ball” offers without regard to the comps. While it does get start the negotiating process, it’s not realistic for closing a deal and some listing agents/seller may not even take it serious. Remember that comparables (“comps”) reflect the general market trend; so offering $225,000 for a home listed at $289,000 and the comps. reflect an average of $260,000 may not make the most sense.
Comps. are your friend! They provide useful information (and “rough” estimates) to guide you in setting the amount that you offer when purchasing a home. It’s the same for sellers when they are deciding on a sales price.
Do you have any questions about finding comps. and integrating them into your plan?