What Makes a Good Offer When Purchasing Real Estate?

What Makes a Good Offer When Purchasing Real Estate?

This is a question we get asked by each and every client with work with. A good offer is one that gets accepted. That is the simplest explanation, however that can be a tricky undertaking.

It may be perceived, especially on the buy side, that a good offer is an offer at the lowest price. This is not the case as the market determines the price. Real estate typically trades hands at a price that other buyers paid for similar improvements (real estate). Now there are situations called distressed sales where prices fall outside this economic fact, however that will not be discussed here.

To make a good offer your real estate broker should first determine market price for the property you are interested in (subject property). This in not always, and often isn’t the list price of the home. Your broker finds the market price by gathering sales of comparable properties as close to the subject property as possible. Then through the art of adjustment, market value is determined.

Next your real estate broker will want to consider how long the subject property has been on the market. This is a good indication as to the willingness of the seller to negotiate on the price. The general rule is that the longer the property has been on the market the more negotiable the seller is likely to be.

Next it is a good idea for your broker to check public records to see is the seller has a recorded mortgage and how much is still owed on the home.  This is another clue as to the willingness of the seller to negotiate. If the seller has the home listed at the amount they owe, the likelihood of them negotiating is lower.

The last thing to consider when determining what makes a good offer is the location of the property. You have heard the adage  - Location, Location, Location. This is a fundamental truth in real estate; the best location commands the highest price. Therefore the best offer may be significantly altered by the location of the subject property.