The
asking prices of most properties that are for sale reflect present
market conditions and recent sale prices of similar homes in the area.
When homeowners price their homes they try to walk the fine line
between getting the highest price and ensuring the asking price is
competitive enough to attract serious offers. While most Selling
Agents advise their clients to realistically price their homes in
order to attract acceptable offers within a reasonable period of time,
some properties may not be properly priced and you should know this
before making an offer.
Before making an offer to purchase a home, you should ask yourself the
following questions:
- What have similar
properties sold for in the immediate area?
- How long were they
on the market?
- How does this one
compare?
- Is it over-priced,
under-priced, or fair value?
- What type of market
is it - is it a Seller's, Buyer's or a Balanced market?"
By having this
information at your fingertips you will be in position to negotiate
the best price and take advantage of any opportunities that may show
up. This is where the experience and knowledge of a good REALTOR is
invaluable. REALTORS spend a lot of time and energy making sure they
know their local market inside and out. They keep their finger on the
pulse of the market and have the resources, connections and ability to
keep you up-to-date with its constant changes. They know all of the
properties currently for sale in your area and are literally your best
resource for finding the perfect home.
The main factors
that affect market value are...
Location:
- availability of
community amenities, such as public transportation, parks, stores,
churches and schools
- quality and
consistency of neighbourhood planning
- future development
plans and local zoning
Property:
- style, layout, size,
age and quality of construction of the building
- size, shape, privacy
and landscaping of the yard
Condition of the
Home:
- first appearances
- floor layout
- quality and
appearance of fixtures
- general overall
condition of main systems (roof, furnace, electrical system,
central air, etc.)
Comparable
Properties:
- the asking and
selling prices of comparable neighbouring homes
The best way of establishing a range of value for a property is to
have your REALTOR prepare a general market analysis of the
neighbourhood you are interested in. This will give you a good
overview of the current market and will show what comparable
properties have been selling for recently.
Market Conditions and
the Economy:
- number of homes
currently on the market
- number of people
looking to buy
- the state of the
local and national economy
- current mortgage
rates
Market Conditions:
No matter the condition
or desirability of a property, its value will be affected by current
market conditions. Here are the various conditions you may encounter
and how they will affect you:
- Balanced Market:
The number of homes on the market is equal to the number of buyers
(supply equals demand). In this market, prices are stable and
homes sell within a reasonable period of time. It is a calm
atmosphere with Buyers having a satisfactory number of homes from
which to choose.
- Seller's Market:
The number of Buyers exceeds the number of homes on the market
(demand greater than supply). In this market prices are increasing
and homes tend to sell quickly. As a Buyer you will probably have
less negotiating room and may experience competing offers when
trying to purchase your home.
- Buyer's Market:
The supply of homes exceeds the number of Buyers (supply greater
than demand). In this scenario prices tend to drop and the
properties stay on the market longer. As a Buyer you will have
more selection and less competition and thus be better able to
negotiate a good deal.
In Summary:
When you understand current market conditions, you are better able to
position yourself as a Buyer. It helps to know if you are in a
Seller's, Buyer's or balanced market when deciding what price to
offer. In a Seller's market, there is little selection and you may
have to make a full-price (or even higher) offer if the home is
properly priced in order beat the competition. In a Buyer's market,
you have a lot more selection and plenty of room to negotiate. In a
balanced market you will find a good selection of homes for sale and
have a reasonable amount of time to decide on a home and negotiate the
price.
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