Find the Lowest, Highest Price

Sometimes the best the market analysis can do is stop you from buying a home for more than it‘s worth or, if purchased, knowing it is being purchased for a bit more than value. Which route a client takes is his or her decision. Buying a home is an emotional purchase and our job is to try to remove the emotion so that our client makes the best choice possible.

A client recently said no to a counter offer. Good decision. The asking price was $109,000 and our market analysis pegged the value at $92,000 – $94,000. The final counter from the seller was $98,000 to which our client said no. That home remains on market. We found a home a week later in the same neighborhood and similar condition which was purchased for $94,000. Happy ending. Our client bought that home.

Whether buying a $1.3 million dollar home or a $94,000 home, the process remains the same: Prepare the market analysis and find the highest price within the low range of the analysis that has a high probability of being accepted. With the analysis in hand, the buyer must decide whether or not to dance. Recall the dance is when one decides to go low, while the seller goes high, most often neither asking the question, “What is the home worth?”

The dance can be avoided if a proper analysis is done. If the home fits what you are looking for, why gamble and dance when you could buy the home at value? One could argue a weak point of mine is that I won’t sell my clients a home. It is also a strength.

A while back we prepared a market analysis for a home with an asking price of $235,000. The range of value was $225,000-$230,000. Our client started at $225,000 figuring they could counter offer. Someone else bid $230,000 and my client did not get the home. The home was worth $230,000 and I question whether I should have been more forceful in suggesting the $230,000 number.

My dilemma is we have smart clients, smart enough to take the time to investigate the benefits of the Exclusive Buyer Agent services of Homebuyer Associates. However, I learned from that experience to be a touch more forceful yet not “sell.”

Another client was looking at a home with an asking price of $194,000. Our analysis said the range of value was $175,000-$180,000. The price had recently dropped and we thought it would sell quickly. Our client wanted to dance and start at $175,000 to which I outlined the risks. An hour later my client called and said to draft an Offer for $180,000. Good call. Two Offers came in on that home and the $175,000 (with my client planning on a counter-offer) would not have been accepted.

There are some basic negotiation strategies but in real estate general rules of thumb don’t often work. There are too many variables. Find as much data as possible about the market and the seller, and mix that with how much you like the home and begin negotiation from that point. “I bought it for $10,000 less than asking” is meaningless. Determine what the home is worth and then buy at the lowest highest point that you can within the analysis.