A property must be fairly assessed before you purchase it. This is to make sure that the price is based on the current conditions and demand in the real estate market. This is what a comparative market analysis is all about. Brokers, sellers, and even buyers can use this as an instrument to analyze and compare a certain property into the market. A good realtor does a comparable market analysis on every property to ensure our clients are getting the most out of the said property, and that the price is right. Using the CMA, buyers will have to accept deals worth it for the property.
Giving the right offer
An expert realtor help clients negotiate with the real estate owners to come up with the best price possible for a certain property. Doing the right comparable market analysis is a way that our clients will be confident that they’re having the best deal. Real agents waste no time in finding you the perfect real estate at the lowest price possible. They use the 7-point market assessment to check out if the market listing is up-to-date. Provide clients with the latest updates on a certain property to ensure they get to know all the details of the property they want. Also show them the historical performance of the said property. For example, if the property was performing at its best because it has a high occupancy rate. Also, the client will know if the property did not perform well. If it did not, this can be of a good advantage to change the deal/offer and adjust it to the properties attributes. That is why a comparative market analysis is very important. It will help clients in acquiring more knowledge about the property they want to purchase. It can answer questions of clients like:
· Is the property’s location desirable?
· Is the property appealing to buyers?
· Does the building have good foundation features?
· Can we still opt for improvements?
The factors affecting a comparable market analysis
A comparable market analysis is just a set of information needed to be able to adjust your offer to a certain property. You should also gather prices from different properties to have an estimate of the price range for your ideal property. Many factors determine the price – current condition of the property, upgrades recently made by the owner, the seller’s determination, and some other economic factors. This will help you make the right offer for a certain property depending on its current market value. We will make sure our price is right and fair, and that clients have the advantage in every deal.
The seller’s determination
How determined is the seller in selling his/her property? If the seller is way too determined, then that is a big advantage for the buyer. The buyer can control the negotiations.
One reason why a seller is determined to sell his home is because he/she already purchased a new house or property. The seller feels that someone must purchase his/her property right away so that he/she will only have to pay one mortgage payment. The pressure is within the seller since they only have a limited amount of time. So to get rid of this pressure, they have no choice but to lower down their selling price and are forced to accept a deal they are not satisfied with. If they don’t, they will face financial problems paying for two properties. This information alone can benefit the buyer, saving more money on the offer. That is why it really pays to be well-informed.
Family issues or problems are also reasons why a person wants to sell his/her home. Buyers should be observant of how determined the seller really is. If the seller is in a hurry to sell his/her property, the seller is more flexible and is more prone to accepting a lower offer.
Your offer must also be based on the real market value of the property, not on the price range the seller is offering. Once the value of the property is compared to the market, neglect the seller’s offer and base your offer on that value.
Also, a distressed seller will save the buyer thousands of dollars more. Due to the seller’s misfortune, he/she is not able to think well on the right deal, giving the most advantage to the buyer. That is why you should settle your real estate problems with an agent. However, be sure that your agent does not have conflicts of interest. A dual agent is an example of this. A dual agent can be an agent for a seller and for a buyer. So if you are really a serious buyer, you should opt for a buyer’s agent, avoiding conflicts or issues.
Conditions in the market play a vital role in determining the price range for comparable properties. A realtor ensures that current market conditions when doing a comparative market analysis. There are 2 different types of market, the buyer’s and the seller’s.
If there are a significant number of buyers, but there are only limited available properties, the market is said to be hot and this market favors the seller’s. During this circumstance, the seller’s take control. Properties are being sold much higher than their selling price because there are plenty of offers seller’s has to choose from. Properties are also sold at a faster rate due to the high amount of buyers. A hot market really does not favor the buyers. However, you may still be able to find your ideal home during this situation. You will just have to increase your offer so that you will be able to get the property you wanted.
On the other hand, buyers also have an advantage, when the market is slow. During this circumstance, available properties in the market are rapidly increasing. Properties also stay available for months, having no offers and no sign of buyers. Property prices within this condition begin to drop down. Sellers are also more likely to accept an offer lower than their selling price since offers are too scarce, and maybe buyers might change their mind and find a different property.
Buyer’s should make offers as low as possible because even with their low offer, the seller will make a counteroffer still lower than their preferred price range. They have no choice because there are a great number of available spaces, yet only a few buyers. If you are a buyer, don’t accept the counteroffer right away; still make negotiations as have the lowest price possible.
However, the real estate market is most of the time steady. Buyers and sellers are mostly equal during these conditions. There are a lot of available spaces, and there are also significant amount of buyers looking to purchase. The price depends upon the strength of negotiations. Every property available in the market always has a buyer waiting to have the deal. In this case, be sure that what you offer is higher than the other buyers. But always be careful in making high offers, take note that you should still base it on the property’s value. Also, when properties are bid at a steady low price, buyers gain control for sellers will have no choice but to accept lower offers.
Making an offer based on the property’s value
The exterior, interior, and structure contribute to a property’s overall market value. However, location is the most important factor. Having a good location will really increase the price range of a property. In choosing an ideal property, you should take a look if its price corresponds to its price range. A property can be classified into three different conditions – above average, average, and the below average.
In assessing the condition of the home, you must look into the age of the building and its structural integrity. Also, check the building’s plumbing and electrical conditions. Check out the bathroom, the kitchen, and other parts of the building. Consider also the outlets and the circuit panel if it is up-to-date, and the drainage if its flow freely. If you don’t know how to assess this area, you can hire a professional inspector to give you advice. Floor plans, space in the closet, sizes of the room, the layout, and functionality of the living areas should also be taken into consideration. Any drawbacks from these areas can decrease the building’s market value and your real estate agent can help uncover these drawbacks for you. Your agent can compare all properties and advise you on which properties are the best.