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When you prepare an offer to purchase a
home, you already know the sellerâs asking price. But what price are you going
to offer and how do you come up with that figure?
Determining your offer price is a
three-step process. First, you look at recent sales of similar properties to
come up with a price range. Then, you analyze additional data, such as the
condition of the home, improvements made to the property, current market
conditions, and the circumstances of the seller. This will help you settle on a
price you think would be fair to pay for the home. Finally, depending on your
negotiating style, you adjust your "fair" price and come up with what
you want to put in your offer.
Comparable Sales
The first step in determining the price
you are willing to offer is to look at the recent sales of similar homes. These
are called "comparable sales." Comparable sales are recent sales of
homes that compare closely to the one you are looking to purchase.
Specifically, you want to compare prices of homes that are similar in square
footage, number of bedrooms and bathrooms, garage space, lot size, and type of
construction.
If the home you are interested in is
part of a tract of homes, then you will most likely find some exact model
matches to compare against one another.
There are three main sources of
information on comparable sales, all of which are easily accessed by a real
estate agent. It is somewhat more difficult for the general public to access
this data, and in some cases impossible. Two of the most obvious information
sources are the public record and the Multiple Listing Service.
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