I figure we’ve lost a couple of dozen people on the headline alone. For the rest of you, though, stay with me …
You’ve found the house you want, with all the amenities you could ask for. A quick look at the comps shows that the market value of the home is $150,000. Your beagle-friendly agent tells you that your best bet is to offer $135,000 to see where everything stands. Maybe the seller will accept the offer. Maybe you’ll receive a counter offer. Unless it’s a bank owned home, where the rules are different, you’re not going to receive an outright rejection.
The offer is submitted. The seller counters. Now is the moment of truth. Except, like an episode of Fringe, the truth isn’t what it seems.
Our key number in this scenario is $150,000 – the market value of the home based on other similar homes that have sold recently in the neighborhood. Go above that without good reason (a remodeled kitchen, for instance) and you’re overpaying; the lender may or may not slow you down with appraisal, and if you’re paying cash those brakes don’t exist.
Any price below that $150,000 mark is good … and will become largely irrelevant the next time a new listing comes to the market.
If you buy a home whose market value is $200,000 and pay only $160,000, how much is the home really worth?
Most buyers will tell you $200,000 – they were able to get a $40,000 “deal”. Except …
When your friendly beagle-loving real estate agent goes to put the home down the block on the market, your $160,000 purchase now is a comparable sale, thus lowering the current market value of your home and those in the area. Thanks to averaging your home probably is worth more than the $160,000 that you paid, but it’s worth less than the $200,000 it had been worth. And once the new listings hit the market taking your sale into consideration …
Now, none of this is to say you shouldn’t try for the lowest price you can get when you try to purchase Phoenix real estate. This isn’t to say as a buyers agent I’m not going to work to get you the lowest possible price.
What I am saying is that keeping everything in perspective is key because the market is a fluid entity. Everything is relative and what seems like a deal today likely won’t be, not in a flat market such as ours.
By the way … if you’re asking yourself “why $135,000”, stay tuned …[tags]Phoenix real estate[/tags]