Information for Home Buyers Who Want to Pay the Right Amount
SELECTING THE RIGHT HOUSE
After looking at houses, clients must eventually decide whether or not one home stands out above the rest as the “right” fit for their requirements. There really is no perfect house; sometimes compromises have to be made. When you find a house that is 85 percent perfect, that may just be the best one for you.
When we have found the right house and the clients are ready to make an offer, this is the point at which we must do our homework carefully. Once you decide on a particular property, we can analyze that listing to see if it really is a good fit financially. If not, then the client must select a different property.
One note of caution, in a seller’s market with tight inventory, there may not be much time to deliberate. Here is where the old saying come in: “You snooze, you lose.”
Be clear about what you want so you can recognize it when you see it and can make an intelligent offer.
What price to pay really should not be a scary thought, because we have many tools for analyzing the market. At this point we go back to the office to work.
REVIEWING THE SELLER’S DISCLOSURE STATEMENT
We begin by reviewing the Seller’s Residential Property Condition and Disclosure Statement (if the Buyer has not already seen it). The Buyer will have to sign the disclosure statement and include the signed disclosure with the written offer for the home. If the current owner has never lived in the house, then they are not required to make disclosures. In such a case, a disclaimer form will be provided in lieu of disclosures.
Corporate owners will require corporate addenda to be signed to cover their assets. The Buyer should review these addenda prior to making an offer to purchase a property.
REVIEWING TAX RECORDS
The property’s tax records give public information about the size of the property, the legal description, and the owners’ names. The records often also tell us when and for how much the Sellers bought their home. We also use the tax records to verify the name of the subdivision and the school district.
GOOGLING THE PROPERTY
A period of due diligence is granted after the contract is signed during which time the client can inspect the property in detail. However, a lot of headaches and heartache can be avoided if clients go online before making the purchase to check out the neighborhood and the environs.
We can check flood plain maps, topographical maps, geological surveys, oil and gas well locations, highway maps, aerial photographs, neighborhood websites, newspaper articles, and legal records online to find as much information about a property prior to making the offer. All kinds of resources are available to clients to help them confirm their decision and help them analyze a home’s worth.
ANALYZING THE MARKET
We will look at the archival history of the home’s marketing and look at neighborhood statistical data. I give buyers copies of public information that is readily available to sellers when they put the home on the market. With this information in hand a buyer can make an informed decision as to how much they can expect to pay for the house.
The first thing we do is check the comparable home sales in that subdivision to see if the home you want to buy is priced fairly and to see how its position in the market relates to others similar to it that have already sold in the last six months. This CMA (comparable market analysis) tells us the price range of sold properties in the area (those homes in the neighborhood that have already closed), the average time on the market (the DOM), and the average sales price per square foot.
In some cases there will not be enough houses that have sold. I find out how long the property has been on the market or if there have been any price reductions during the listing period. This history of the listing is public information. I also try to find out if there have been any other offers on the property, and what the motivation of the Seller is; however this information may not be available unless the seller has given express written permission to the listing associate to reveal their motivation and details about how much they will accept for the house.
One thing that Buyers quickly discover is that they themselves become amateur appraisers. After a day out, buyers begin to know instinctively if a house is overpriced. Fortunately, since our market has many subdivisions and master planned communities, there are many similarities among houses and comparisons can be made easily. There is no point in overpricing a home, since it won’t appraise when the Buyer goes to get a mortgage. Therefore, there is a smaller margin of pricing over what an actual market price would bring. The greater challenge arises when we are dealing with unique properties, historic homes, and scenic properties.
After looking at all this information, the term “brain death” comes to mind. However, no one wants to discover after they have bought their home that they paid too much. Nor do you want to risk not getting your dream home because you did not realize that the seller’s list price really was a fair price and you should have offered what they wanted. This is a necessary step. It should not be avoided.
STRUCTURING THE OFFER
Buyers review the data and decide how much to pay for the house and how to structure their offer. Buyers can take as much time as necessary to make this important decision. However, in our competitive seller’s market, we cannot guarantee that a home will remain on the market while you hesitate to make a timely decision. While sleeping on it is wise, you may find yourself in a position where you will have to “pull the trigger” and make a quick decision. So be ready.
It is always the Buyer’s right to make decisions based on information provided by the REALTOR. In fact, it is best when the Buyer makes the decision without my interference, because in reality I cannot tell a buyer what to do. My job is to present options and guide the buyer through the process to the best of my ability. I always say: “I provide. You decide.”