Determining the Price

Understand Market Conditions

Understanding market conditions is essential when determining your offer price. Analyzing whether it's a buyer's or seller's market will help you make a strategic and informed decision.

• Seller’s Market:

  • Limited inventory leads to higher competition among buyers.

  • Homes sell quickly, often at or above the asking price.

  • You may need to offer above asking or include incentives to be competitive.

• Buyer’s Market:

  • More inventory means less competition.

  • Homes stay on the market longer, allowing for stronger negotiation power.

  • You can often negotiate a lower price or request concessions from the seller.

Analyze Recent Market Trends

Understanding how home prices fluctuate over time can help you gauge the best time to buy or make an offer.

• Review trends in home prices over the past 3 to 6 months.

• Identify whether home values are appreciating or declining.

• Use market analysis tools, such as:

  • Homa’s market insights to track price movements.

  • Local real estate reports from MLS or public sources.

  • Zillow and Redfin data to compare listing trends.

Analyze Comparable Sales (Comps)

Comparable home sales (comps) are recently sold properties similar in size, condition, location, and features to the home you want to buy. To asses comps most accurately:

• Look at homes sold in the past 3-6 months.

• Adjust prices based on differences in features (e.g., renovated kitchen, larger lot size, less square footage).

• Consider how long these homes took to sell and at what percentage of the asking price.

• Review the home's condition in comparison to others that have recently sold.

• Use Homa's pricing strategy tool to research nearby home sales.

Property Condition Impact

Move-in ready homes typically command a higher price because they require minimal repairs or upgrades, making them more appealing to buyers who want a hassle-free purchase. In contrast, homes needing renovation allow buyers to negotiate a lower price due to repair costs, and it is important to assess whether they qualify for a renovation loan or align with your budget before making an offer.

Consider the Seller’s Situation

How long a home has been on the market can indicate its desirability and potential for negotiation. A newly listed home, especially within the first 30 days, is more likely to attract multiple offers, making negotiation less favorable for buyers. At a minimum, a seller is less likely to negotiate during this time as they wait to see what the market will do. However, if a home has been on the market for more than 60 days, it may indicate that the price is too high or there are potential issues, increasing the likelihood that the seller will be open to lower offers or concessions.

Consider The Seller's Motivation

• Relocation or Urgency: Sellers needing to move quickly may accept lower offers.

• Investment Property Sales: Investors may be motivated to close quickly and may negotiate.

• Distressed Sales (Foreclosures, Short Sales): Often priced below market value but may come with additional

Factor in Additional Costs

When determining the price you want to offer, it's important to consider more than just the listed price. Closing costs, which typically range from 2-5% of the loan amount, can add a significant expense, along with ongoing costs such as property taxes, homeowners insurance, and HOA fees. Additionally, any immediate repairs or upgrades you plan to make after closing should be factored into your budget, as they can impact your overall affordability. Taking these expenses into account ensures that your offer is not only competitive but also financially manageable in the long run.

Make a Strategic Offer

Strategy is everything when submitting an offer price, as a well-calculated offer can make the difference between securing a home for the right price and losing out to another buyer. Understanding the market, seller motivations, and how to position your bid effectively will increase your chances of a successful purchase.

Initial Offer Strategy

• Offer at or Above Asking: Best for competitive markets.

• Offer Below Asking: More appropriate for homes on the market longer or in buyer’s markets.

• Escalation Clauses: Allows your bid to increase automatically if other offers are received.

Negotiation Options

Ultimately, an offer is not only about the price, but also your other terms terms. A well-rounded approach ensures that your offer is both competitive and aligned with your goals. Here are some additional options to get a better deal or make your offer stand out:

• Request Seller Concessions:

  • Cover part of your closing costs.

  • Ask them to provide a home warranty.

• Offer Flexible Terms:

  • Shorter or longer closing timelines depending on seller’s needs.

  • Allowing the seller to lease back the property after closing.

• Earnest Money Deposit:

  • A higher deposit shows serious intent and can make your offer more attractive.

• Waive Contingencies:

  • While not encouraged, if you're willing to waive your financing or inspection contingencies, this will make your offer stronger.