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| Our Sample House |
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10 years old |
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Asking price = $155,000 |
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If our sample house was a new home we would have little room to negotiate, because new homes are usually pre-appraised and the builder's financing is tied to those appraisal values. |
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Individual homeowners seldom have a home appraised before putting it on the market. Seller's often set price based on: |
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the purchase price he paid, plus |
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the improvements he has made and |
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how much cash he needs for his next home. |
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but |
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- True market value is determined by what buyers are paying right now for similar homes in the same neighborhood.
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Construct an offering price by estimating the home's true market value |
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| How ? |
Get the prices of similar homes recently sold in the target neighborhood. |
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- The people at HomePrice.Net provide a comprehensive, CMA type price analysis, plus a report on school quality, crime statistics and other neighborhood information.
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Drive or walk by each of the recently sold homes and compare the size and condition with the home you want to buy. |
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Rely on your real estate agent's advice... |
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... but not about your Offering price ! |
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| Why ? |
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- Your friendly agent has a responsibility to sell each house at the highest possible price.
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- Your agent is your best source of advice for everything other than purchase price.
(And as we'll see, these other things can be more important than price.)
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Comparable Market Analysis (CMA): Prepared by your real estate agent, the CMA lists the selling prices of similar homes recently sold in the same neighborhood. See a sample CMA |
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New Home Prices
Little room to negotiate
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| Prices of new homes are far less negotiable than prices of older homes. Developers can't give you a deal because that would undercut appraisals on other homes in the development. Negotiations is effectively limited to "upgrades" on things like flooring and appliances. |
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Comparable Market Analysis (CMA)
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| A Comparable Market Analysis (CMA) compares actual selling prices of homes recently sold in an area |
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"Your" Home, the one you want to make an offer on -- is 134 Harbor Pl, marked with an arrow. |
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Address |
Bedrooms |
Baths |
Square Ft. |
Garage |
List Price |
Sold Price |
DATE |
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134 Harbor Pl |
4 |
2 |
1904 |
Y |
$155,000 |
N/A |
N/A |
1 |
123 Harbor Pl |
4 |
2 |
1770 |
N |
$148,250 |
$145,000 |
3/18/01 |
2 |
128 Harbor Pl |
4 |
2 |
1996 |
Y |
$153,900 |
$152,000 |
6/15/01 |
3 |
44 Baltic |
4 |
2 1/2 |
1812 |
N |
$150,000 |
$149,950 |
12/5/00 |
4 |
12 Sea View |
4 |
2 |
1772 |
N |
$144,000 |
$142,250 |
8/02/01 |
5 |
22 Sea View |
4 |
2 |
1710 |
N |
$153,000 |
$152,000 |
11/1/01 |
Range of Sold Prices: $142,750 --- $152,000 |
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On average, Buyers paid 1% less than Seller's asked |
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The next step is to drive or walk by each of the homes on the list. If "your" home is larger or in better condition than most, you can justify paying a higher price, but if it's smaller than average you might start with a lower offer. |
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