I want to write an offer on a home for sale…do I need to offer over asking
In today’s real estate market in Santa Clarita many Realtors are advising their buyers that to get an offer accepted on a home for sale, you must write a strong offer- possibly over asking price. The golden question is how much should I write an offer for and how much is too much before I am over-paying for a home. Quick answer is…how much is the home worth to you and your family? The true value of a home is what a buyer is willing to pay and a seller is willing to sell for. Ok, with that aside, what is too much or too little? It is honestly difficult to play the game of a bidding war but there is always a winner.
Recently I was asked a question that sparked this blog. ” I see the home down the street sold under list price. What do you mean I should write an offer for over list price.” Yes this is true. Homes do still sell under list price. However a few factors go into why a home may sell under list price.
If the home was a short sale and has been pending or in escrow from 6-12 months the value of the closed sale will not reflect current market conditions as if you were bidding for that home today. In fact we are seeing buyers that wrote offers on short sales 6-12 months ago and are just now closing escrow have significant amount of equity as soon as they close escrow because of this lag time. Some FHA buyers are even able to refinance into a conventional loan (which normally requires 20% equity or more, consult a lender).
Another factor is desirability of the lot and condition. If the home faces a main highway and or is in need of major repair but appears move in ready from the outside it will likely be bought by an investor.This will result in a lower purchase price typically.
The last factor has an impact on almost every escrow lately. Appraisal issues! The lending industry has changed and so have the guidelines for appraisals. An appraiser is under a close watch to assure that the home is only appraising for its true value. Some appraisers don’t understand our market or don’t do enough research and limit the amount the home sells for regardless of what the offer price is and sometimes the offer amount is simply much more than market value without enough reason to justify the offer price. That being said some buyers are willing to contribute cash in order to close the deal. We have had a buyer pay 42k cash over appraised value, in order to close the transaction.
Lets look at statistics! I have taken the time to go through the MLS and see what reflects in each area. There are so many details that can change these numbers just a little. Once you narrow your criteria you can re-run the numbers to see how it independently affects you. However this will give you an overall perspective.
Last 30 days from 12-12-12 the amount of closed transactions 282 for Santa Clarita which included the areas listed below.
Canyon Country 71 homes sold -26 of them closed below list price = 36%. Average of $13k below list price and the homes that sold at or over list price were an average of $6k above.
Castaic 24 homes sold- 7 of them closed below list price = 29%. Average of $12k below list price and the homes that sold at or over list price were an average of $7k above.
Newhall 26 homes closed escrow 12 of them closed below list price = 46%. Average of $24k below list price and the homes that sold at or over list price were an average of $3k above.
Valencia 88 homes closed escrow 34 of them closed below list price = 38%. Average of $18k below list price and the homes that sold at or over list price were an average of $9k above. Interesting diffenence in Valencia is that the average sale price in the homes that sold below market value were $490k vs. the homes above list price were in the mid 300’s.
Saugus 62 homes closed escrow 16 of them closed below list price= 26%. Average of $15k below list price and the homes that sold at or over list price were an average of $7k above.
Stevenson Ranch 11 homes closed escrow 2 of them closed below list price = 18%. Average of $25k below list price and the homes that sold at or over list price were an average of $8k above.
Conclusion seems that the average amount a home is selling over list price is near $7k. If you were looking to write an offer on standard sales only these #’s would change. For a custom statistic report please contact us. We are here to help educate you to make the best decision for you and your family.
Sellers if you are thinking about selling your home please contact us on how you can be the statistic above list price!
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