How much should I offer on a South Charlotte NC home for sale?
When working with home buyers, one of the most important questions I get is "How much should I offer on this South Charlotte NC home for sale?" My job as the Buyer Agent is to provide my home buyer clients with all of the information they need to make a wise decision on their home purchase price. Making an offer on a South Charlotte home for sale is the first step in the negotiation process, and like all first impressions, the offer should be realistic and get the attention of the seller. Your Realtor® will have local expertise and access to lots of market data that will help you figure out how much to offer on a home for sale.
First, here are some factors you should NOT USE in determining your offer price:
- Tax value - Tax value is merely a snapshot in time of what the county tax appraisers determined was the value of the home. Charlotte property tax values were last reassessed in February, 2011, and the market has changed a lot since then.
- Zillow "Zestimate" - Many home buyers are tempted to rely on Zillow Zestimates to arrive at a home's market value. However, the Zestimate does not adequately reflect the value of renovations, location, and neighborhood allure. Reliance on the Zestimate algorithms may cause you to lose the house you want to buy.
- What the seller PAID for the house - what the seller paid for the house 6 months...1 year...5 years ago is irrelevant. Market value is a reflection of TODAY's real estate market, based on RECENT comparable sales.
- Price/Square Foot - Although the price per square foot number is a helpful tool in determining a range of value, you should not base your offer SOLELY on price/square foot. For example, if you have two 3,000 SF homes and one home has a completely renovated kitchen and master bathroom, it will be worth more than a 3,000 SF home that does not have these upgrades. Therefore, the price/square foot of these two homes should be different.
Here are some factors you SHOULD USE in determining your offer price:
- Detailed CMA from your Realtor® - Your Realtor® should provide you with a detailed comparative market analysis (CMA) for the home you want to buy compared to recent, similar home sales in the last 3-6 months. This CMA will make adjustments for # baths, SF, upgrades/renovations, garage/no garage, etc.
- Current market conditions in the area - Your Realtor® will provide information about the current market conditions in the neighborhood, area or zip code. Are homes selling quickly or lingering on the market? What is the average list-to-sales-price ratio?
- Multiple Offers? If there are multiple offers on the home you want to buy, your negotiating power will be much less. If you really want the house, make sure to make your highest and best offer (both price and terms) or you may risk losing the house to a more aggressive buyer. I am seeing many multiple offer situations in South Charlotte, with buyers often paying OVER list price to get the home they want.
- Pre-Approval or Cash? - Your offer will be strengthened greatly by having a strong pre-approval letter or loan commitment letter from your lender, showing that you are financially qualified to purchase the home. Cash offers carry less risk than offers contingent on getting a mortgage, and therefore can be very attractive to sellers. However, DON’T EXPECT a seller to give his/her house away just because you are offering cash.
- Absorption Rate - Your Realtor® can tell you whether it’s a buyer’s or seller’s market by calculating the absorption rate for the area. Absorption rate measures inventory levels. When inventory levels are low, there is often less room to negotiate on price because buyer demand surpasses seller supply.
- Days on Market (DOM) - If the home has been on the market a long time, with several price reductions, the seller may be more willing to negotiate than a home that has only been on the market for a week.
- Range of Prices in the Neighborhood - Your Realtor® can provide you with the sold prices in the neighborhood, from lowest to highest. Be wary of being the highest price in the neighborhood!
- Distressed Property - If the home is a foreclosed or REO property (real estate owned by the bank) or a short sale, the bank may be willing to consider a further discount. It depends on whether the home was listed at below market already. Banks will typically lower the list price on REO properties every 30-45 days, so you may want to time your offer according to this schedule.
- Seller Motivation - This can be difficult to ascertain because in NC, listing agents are not supposed to divulge the seller’s motivation to sell. But you can look for signs - is the home vacant? Are the boxes already packed? Is the listing agent aggressively marketing the property and asking for any and all offers? On the other hand, an overpriced home that has been on the market for a long time with no price reductions may indicate an unrealistic, unmotivated seller.
- Location - If the home you want to buy is in a highly desirable neighborhood or school district, or has a premium lot (waterfront, golf course, privacy) you can expect to pay more than for a home in a less desirable location. On the contrary, if the home abuts a busy road or highway, power lines or other negative factor, the home should sell for less to account for these negatives.
- Other Terms of the Offer - Other terms of your offer can also impact a seller’s response, such as the closing date, contingencies (inspections, sale of current home), amount of your earnest money deposit and due diligence fee, asking for closing costs (which will affect the seller’s net) and/or lots of personal property such as their refrigerator, washer and dryer and furniture. If you ask for a lot of extras, the sellers will likely ask for a higher purchase price.
As you can see, there are MANY factors to consider when trying to decide “how much should I offer on a South Charlotte NC home for sale.” Your home purchase is likely your biggest financial investment, so please discuss these factors with your Realtor, and listen to his/her expertise and advice. It can make the difference in whether your offer is accepted or not. There will be some negotiating back and forth, but knowing your market conditions will help you settle on your offer price and ultimately the contract sales price.
Remember, the sellers have access to the same information that you do; their goal is to sell for the maximum amount the market will bear, and your goal to to pay the least amount the seller will accept. It can be a fine line, and each transaction is different. It is all part of understanding the home buying process in Charlotte NC.