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Know Real Estate Prices for Real Estate Investments
Setting prices as a seller: When helping a seller set a price on their property, there are a number of factors that you will want to share with the seller so that they set a price that makes them the most money and sells the property the fastest. A real estate agent is responsible for researching other properties in the area of your client’s property to find the average price per square foot. The properties should be similar to that of the seller’s having the same or close to the same square footage. They should also be the same building type (i.e., house, apartment, commercial building, etc.) and they should be in the same area as the seller’s property. If you are not planning on using a real estate agent, then you will want to at least consult with another investor or an agent to find out the best websites to find this information. All county websites have public property appraisal and property tax websites that give information on how much properties are purchased for in an area, along with square footage, building type and amenities of the home. A Multiple Listing Service (MLS) allows you to search properties based upon criteria that you specify. When you find properties that match the criteria, you find the price per square foot and then look for any unique characteristics of the property that would validate listing the property at a higher price than the seller’s property. Remember that a smart buyer will ask why your home is worth more than another home for sale or recently sold in the area, so be prepared for these questions. MLS services are available through their websites, although most local realtor associations will have a website that is more up to date than nation wide realtor websites will be. If you are a real estate agent, you will want to prepare a group of properties to show the seller. Once you have a group of properties ready to show to the seller, show them the MLS information and price per square foot. Compare each property to that of the seller’s and then help the seller determine an asking price for their property. Remind the seller that pricing their property just a few thousand dollars lower could result in an immediate sale of the property. Buying prices: If you are representing a buyer, there are several things you and the buyer can do to affect the price of the property during the negotiating phase. They include, but are not limited to the following list. 1. If there are other buyers making offers on the property, then it may be to your advantage to offer the list price on the property. While other buyers are making offers below the list price, your offer may save the seller from having to make a decision. 2. Make sure you have reviewed as many price affecting factors as possible. If the house has been inspected, obtain the inspection notes to determine what fixes need to be made to the property. Obtain approval as quickly as possible for a loan amount so that you know how much you can afford to offer. Lastly, obtain an agent or broker in advance so that you know the commission they charge for the sale of the property. Once you know these numbers, you will have a better idea of what properties you can afford to buy and how much you can afford to offer on the property. 3. Sometimes a seller will appreciate an offer that includes a percentage of the total amount rather than a given amount. For example, you could help the buyer make a decision to offer a bid that is one or two percent higher than the best bid on the property. 4. Lastly, you and the buyer can let the seller pick the closing date for the property sale. This may not present a financial change in the price necessarily, but it may help the seller come to a positive decision more quickly on the buyer’s offer.
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This intel was contributed by larryg
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May, 2012
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