DETERMINING MARKET VALUE
We’ve found THE HOME and you are anxious and excited to put in an offer. Now is the time for us to sit down and have our strategy meeting. The more we know about this house and what’s been going on in the neighbourhood is critical to our success. This is the step where we set up the magic of great deal making, because if you know all the right information, and what to do with it, the rest will fall in line.
REPORTS, REPORTS & MORE REPORTS
Many of our new clients are taken aback at how much research we conduct on a home we’re considering for offer. Previous agents might have shown them what has sold in the area and suggested a price relative to this. We believe that this is an unacceptably low level of research. Why? Because real estate agents have a massive amount of data available to them, and since our goal is to buy the house for the best price, we need to uncover any advantageous information that others have missed.
CMA: Comparative Market Analysis
This is a report that shows a list of other similar homes that have sold in the area, and this is the base level of research. The real estate agent creates this report custom to your situation. This is why it is essential that the agent knows the real dividing lines of each neighbourhood to ensure all the homes selected actually are comparable. If the agent misses a home that sold for much less, or includes a home that sold for more but isn’t actually comparable, you might overpay without even knowing it. It’s very important to thoroughly consider what you are being shown.
Statistical Reports
Numbers don’t lie. Whether you care for statistics or not, it could save you money when buying a home. Average days on market, sold to ask ratio, absorption rate, etc., will tell you a lot about what price you can open negotiations with, and at what price you should expect to actually get the home for. We will review what all of these statistics are, what they mean, and how to use them in our favour.
Tax Assessment Comparison
We use this report every time because it’s worth its weight in gold. Within a given city, If you pay higher taxes, your home is more valuable. Two homes that may look very similar could be assessed very differently and one could have a much higher value. Sometimes, this is how we find a deal, where a home is priced low relative to its assessed value. Or, we can use this to argue that the value of the home is lower than the asking price. Doing this research provides a lot of ammunition for negotiations.
Square Footage Reports
Square footage is a major component to a home’s value. We can pull reports that tell us the the square footage of similarly priced houses as a basis for negotiations. If the house you like is 200 square feet smaller than others home at that price, we know the house you want is overpriced. On the other hand, if all the other homes with the same square footage sold for a higher price, then we know we’ve found great value in the home you are interested in. This report is not used nearly often enough and is a fantastic bargaining tool.
Search of Land Registry
Its always worth researching who owns the property you are looking to purchase, so that you know that you are dealing with the proper parties in negotiations. If the seller on the listing failed to include anyone who has legal rights to the property, your deal might be worthless.
SUBJECTIVE ANALYSIS
All the reports we do are tell us how high you can go without technically overpaying for the home. It’s a line we will clearly draw for you, and though we always want to get the house for as cheap as possible, this is the capping point of current market value. Now other factors come into play that must be considered.
- Is it a sellers market? The answer has been yes for some time
- Are there other people interested in the house? The agent must tell us if there are other offers
- How is this neighbourhood appreciating now and projected into the future? A higher investment now may pay off 10 fold in years to come…or not! We need to review.
- What’s the top dollar you would pay for this house, and if it sold for $1 more, you would have no regrets? If you do find yourself in competition, it’s important to plan ahead so you feel confident about any result.
These situations need to be considered in advance and factored into our plan. We make every effort to educate & prepare you so that nothing is a surprise to you when we get into negotiations. Feelings can often creep in, but the best deals are done with no emotional persuasion. Even that being said, the hardest gap to close is always that last 3-5%, and both sides want to “win”. But once you are armed with all of the facts, it’s not about winning against a seller, but getting the best possible price for the home you love.
