what's it worth? structuring an offer
TRANSCRIPT
What’s It Worth? Structuring an Offer
Monica Florio
Long & Foster, Realtors
June 11, 2011
Step 1: What’s the market temperature?
• How is the market trending?
– Is demand increasing or decreasing?
– Is this a buyer’s market or a seller’s market?
• Why does it matter?
– As a buyer, this tells you how much you’ll be competing with other buyers for the house you want.
– It also tells you how much time you have to act.
Defining a buyer’s market
• An excess of supply over demand, leading to abnormally low prices
• What you’ll see in a buyer’s market:
– Houses sitting on the market for a long time
– Sellers offering incentives tobuyers, like seller-paid closing costs and home warranties
Defining a seller’s market
• An excess of demand over supply, leading to abnormally high prices
• What you’ll see in a seller’s market:
– Fewer days on the market
– Homes selling for more than asking price
– Multiple offers
– Fewer contingencies, shorter contingency time frames
Months of supply
4-6 months of inventory is a market in balance
Inventory = Number of properties for saleNumber of homes sold in the last 30 days
How is the market trending?
• Is the # of months’ inventory increasing or decreasing? That gives us an indication of which direction the market is headed.
4-6 months
Market in balance Seller’s market Buyer’s market
1-4 months 6+ months
Step 2: Look at the comps
• “Comps” are properties comparable to the one that you are writing a contract to purchase
• Look for properties that are the most similar, and use activity that is the most recent possible to the property that you want to buy.
• Look at: • What has SOLD recently
• What is UNDER CONTRACT
• What did NOT SELL
• What is AVAILABLE (most likely you’ve already seen the other similar properties on the market)
Biggest factors influencing price
Location (biggest influence on price): city, neighborhood, position within the neighborhood,
attractiveness of the lot
Size: square footage, lot size
Condition (smallest influence on price): does it need major upgrades?
Step 3: Put it in writing
• The next decisions are about timing:
– Your timeline vs. seller’s timeline
– How many days for home inspection?
– How many days for financing / appraisal contingencies?
– When do you want to close?
Other factors to consider
• Will you ask the seller to pay closing costs?
• Will you add additional contingencies, or waive a few contingencies?
Putting it all together
• In determining price and the other factors that go into a purchase contract, we’ll consider:
– How the market is trending
– What comparable properties are selling for
– Other factors, such as timing, that will be influenced by market conditions
Sources of information
• Metropolitan Regional Information Systems (MRIS)
• Northern Virginia Association of Realtors® (NVAR)
• The Long & Foster® Market Minute
The Smarter Homeowner Seminar Series
Register at: http://www.urbanlivingintheburbs.com
Location:Long & Foster Fair Oaks13135 Lee Jackson HighwayFairfax, VA 22033703-651-2502
