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Formulating an Offer

So you've found a home you'd like to buy. How much should you offer to pay?

To help answer this important question, your buyer's representative will prepare a detailed Comparative Market Analysis (CMA) that examines recently-sold properties, active listings, pending sales and expired listings. Through their Multiple Listings Service (MLS), your agent has access to the most current information on properties in your area

From the CMA and your agent's personal knowledge, you'll gain insight on the market and the specific property you're considering - important details that should be factored into your offer. These include:

Market Facts

  • Price of similar properties - both list and sales prices for similar propereties in the area

  • Price trends - current percentages of list pirce copared to sales price

  • Supply and demand - in a high-demand, low-supply market your offer may be competing with otehrs

  • Absorption rate - number of month's supply of inventory. Small numbers (short time frames) indicate a more competitive market for buyers

  • Average time on market - because listings expire or homes may be re-listed to appear "new" cumulative market time is critical

Property Facts

  • Property Condition - is it in good condition or will you need to make substantial investment in repairs?

  • Length of time on the market - A long time on the market may indicate a slow market, inappropriate pricing or some inherent problem with the property

  • Seller's motivation - a seller under pressure to close a deal may be more receptive than one who can wait until the "right offer comes along"

  • Terms - what terms and contingencies must be written into the offer? Terms that make your offer more attractive include an all-cash transaction, pre-approval for financing, quick closing, and few contingencies or seller concessions

  • Property History - previous sales and financing history

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