Determining How Much to Offer for
a Real Estate Property
When you prepare an offer to purchase a home, you already know the seller’s asking price. But what price are you going
to offer and how do you come up with that figure?
Determining your offer price is a 3-step process:
- First, look at recent sales of similar properties to determine a "price range."
- Then, consider additional data, such as the condition of the home, improvements, current market
conditions, and, yes, even the circumstances of the seller. Here. your Realtor®, having been doing business in this market, will have good information about many of the recent sales you're trying to compare against.
The process to this point will help you settle on what you think would be a fair price to pay for the home.
- Finally, depending on the negotiating style of you or your Realtor®, you may want to adjust your "fair" price
and come up with the actual price you'll put in your offer.
Comparable Sales
The first step in determining the price you are willing to offer is to look at the recent sales of similar homes. These
are called "comparable sales." Comparable sales are recent sales of
homes that compare closely to the one you are considering purchasing.
Specifically, you want to compare prices of homes that are similar in square
footage, number of bedrooms and bathrooms, garage space, lot size, and type of
construction.
If the home you are interested in is part of a tract of homes, then you will most likely
find some exact model matches to compare against.
There are two main sources of
information on comparable sales, all of which are easily accessed by your Realtor®but
somewhat more difficult or impossible for the general public to access. Two of the most obvious information
sources are Public Records and the Multiple Listing Service data.
Comparable Sales in Public Records
Information on comparable sales is the public records at your County Court House.
When someone buys a home the property is deeded from the seller to the buyer. In most circumstances,
this deed is recorded at the local County Recorder's office which uses this data to determine the
assessment of the property for tax purposes.
"Provided there have been no additions to the property since it last changed hands, the information in the
public records is usually correct regarding sales price, square footage, and numbers of rooms," says Bob Henley, a well-known The real estate professional acting as your Buyer's Agent is, without a doubt, your best source of information in determining what price to offer. He or she
will provide you with the right data to help determine your offer price.
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