Know the Market before You
Buy
The
asking prices of most homes on the market indicate the current state of the
market, and usually mirror the prices for which other similar homes in the area
have recently sold. In deciding upon a
selling price, a home-seller must establish a balance between the desire to
draw the highest offer and finding a price that will be reasonable enough to
attract an appropriate pool of prospects, and competitive offers. While most selling REALTORS® counsel their
clients to consider this equation when pricing their home, keep in mind that
some homes are not properly priced.
It’s important to educate yourself about
the current market before approaching the purchase of a home. The market will always influence a property’s
value, regardless of the state of a home, or its desirability. Here are the types of market conditions and
how they may affect you:
- Seller’s Market:
A seller’s
market is considered a “hot” market.
This type of market is created when demand is greater than supply that
is, when the number of buyers exceeds the number of homes on the market. As a result, these homes usually sell very
quickly, and there are often multiple offers.
As a buyer, you need to consider that many homes will sell above the
asking price; in other words, you may have less room to negotiate, and may
encounter competing offers. Though most
buyers want to get a home for the lowest price possible, reducing your offer
could mean opening the door for another buyer instead.
- Buyer’s Market:
A buyer’s market
is a slower market. This type of market
occurs when supply is greater than demand, the number of homes exceeding the
number of buyers. Properties are more
likely to stay on the market for a longer period of time. Fewer offers will come in, and with less
frequency. Prices may even decline
during this period. As a buyer, you will
have more selection and flexibility in terms of negotiating toward a lower
price. Even if your initial offered
price is too low, the seller will be more likely to come back with a
counter-offer, so you can begin the process of negotiation.
- Balanced Market:
In a balanced
market, supply equals demand, the number of homes on the market roughly equal
to the number of buyers. When a market
is balanced there aren’t any concrete rules guiding whether you should make an
offer at the higher end of your range, or the lower end. Prices will be stable, and homes will sell
within a reasonable period of time. You
will have a decent number of homes to choose from, and may encounter some
competition for offers on the home of your choice, or none at all.
Before you make
an offer to purchase a home, establish whether the current market is a Buyer’s,
Seller’s, or Balanced market. Also,
evaluate the price similar properties have sold for in the area, and the length
of time these properties spent on the market.
Determine how the home you’re considering compares to these other
sales. Is this one over-priced,
under-priced, or a fair price? By
establishing this information prior to making an offer, you will be in a
position to negotiate the best price for the home and be prepared for any additional
opportunities that may come your way.
Keep in mind, a
realtor is trained to provide clients with this information about the market,
helping you make the most informed decision possible. The right realtor will guide you through the
ups and downs of the market and keep you up-to-date with the types of changes
you might expect. These realtor resources
and connections will prove to be invaluable as you navigate the real estate
market.
The other main
factors that affect market value are:
- Location:
The proximity of
the home to amenities, such as schools, parks, public transportation, and
stores will affect its status on the market.
Also, the quality of neighbourhood planning, and future plans for
development and zoning will influence a home’s current market value, as well as
the ways in which it might change.
- Property:
The age, size,
layout, style, and quality of construction of the building will all affect a
property’s market value, as well as the size, shape, seclusion and landscaping
of the yard.
- Condition of the Home:
This includes
the general condition of the home’s main systems, such as the furnace, central
air, electrical system, etc., as well as the appearance and condition of the
fixtures, the floor plan of the house, and its first appearances.
- Comparable Properties:
Examine the
selling and asking prices of similar homes in the neighbourhood. Ask your Realtor to prepare you a general
market analysis of the neighbourhood you’re interested in, so you can determine
a range of value for a particular property.
A market analysis will provide you with a market overview and give you a
glimpse at what other similar properties have been selling for in that area.
- Market Conditions/ Economy:
The market value of a home is additionally affected by the number of
homes currently on the market, the number of people looking to buy property,
current mortgage rates, and the condition of the national and local economy.
I am the GUY that will make a difference!
I specialize in selling homes in the in the Okanagan Valley including
Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview
Heights, West Kelowna Estates and Shannon Lake.
Karen Guy, REALTOR®
Coldwell Banker Horizon Realty
C 250.878.3605
O 250.768.8001
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