Back to the Basics: Buyers Checklist - What Kind of Preparation Goes into a Winning Offer?
by John Occhi, Hemet CA REALTOR
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Once again, the "Back to the Basics" series of article is my attempt at reeducating myself. About what it takes to be a successful REALTOR® Like many, I have read many great books, heard some fabulous tapes and CD's (even a few MP3's - I still can't really figure that out though) and have attended numerous seminars and training events - some I pay for and others are free.
Just this afternoon, I received a nice compliment in an email form a retired individual who read my ActiveRain blog. He wants to get into short sale investing in Arizona (still looking for a referral agent in the Scottsdale area) and he thought that my collective works on the topic of Short Sales and Investing was impressive.
The compliment came in the form of a statement suggesting that I had forgotten more about Short Sales than he ever hoped to learn. Although certainly a compliment that shows respect for my work it has bothered me all day long...what have I forgotten?
Earlier in the week, I started my "Back to the Basics" series of articles in an attempt to refresh myself and share some of what has gotten me where it has gotten me over the past several years. Now, I am on a quest to regain all of the knowledge that I have since forgotten since my early days in real estate.
I have written a couple of articles today concentrating on negotiating skills representing the buyer. In one article, I addressed the importance of different issues involved in writing an offer - often much more than price.
Then in the next article, I addressed the importance of letting me, the buyers Hemet REALTOR® know exactly how far they are willing to go in the negotiations, so that I can represent the buyer without creating a paperwork nightmare.
This article is all about preparing for the offer, before we ever break out the contracts.
The Winning Offer Preparation
In order to develop an offer that is sure to be a winner with both the buyer and the seller it is important to fully understand what you are going to offer and why.
Many Hemet, CA home buyers fall into the trap of making an emotional decision to buy their Hemet home. I always enjoy working with an investor, because for them buying a Hemet home is purely business and if the numbers don't make sense they will not go through the deal because they are attached, nor will they have an emotional meltdown because they did not get the Hemet real estate deal they started with. Investors know, there are too many other deals out there to quit now.
So, to put together the perfect offer, the Hemet home buyer must be armed with the right information. Yes, the argument can be made that they can do this on their own with an internet connection, but as a full time professional Hemet Realtor, now one knows my market better than I do and therefore cannot come up with the information and insight that only I can provide for my Hemet real estate buyer clients.
Price - Is the listing price reasonable or is it out of the ball park. With so many properties on the market today and so many short sales and REO properties it is getting even more difficult to determine a true fair market value for a Hemet home in today's market.
The situation is complicated even further with the lack of many mortgage programs that have been traditionally available to the home buyer. If the market loses many of its homebuyers because they can no longer qualify for a mortgage, it has to affect the price based on the principals of supply and demand.
As the buyers' agent, it is my responsibility to take the time and generate my own market analysis of the Hemet home that my buyers want to make an offer on. In my market analysis, or CMA as it is often referred to, I will analyze the available homes, or ACTIVE listings, for sale in the local Hemet market. These active listings will alert me to the available inventory and when divided by the number of sold listings will let me know in reference to time, how much available inventory is in the Hemet market, which is comparable to the subject. Of course these homes are typically priced for much more than what they will ultimately sell for.
The most important comp I will look at is the SOLD. This will tell me what has actually been accepted by the market. I will look at different numbers to help me evaluate the sold listings. I want to know the days on market as well as the difference between the list price and the sale price as well as what the home sold for based on the dollar value of each square foot of living space.
Other listings I will consider, to a lesser degree will be the PENDING listings or those that are currently in escrow. This will give me an idea of how active the market is. Finally, I will look at those homes that have recently been offered for sale but have had the contracts expire. These EXPIRED listings will tell me what the market will not bear.
When considering which properties to consider, I will always look at those that are the closest to the subject in both size, amenities and distance. I have a complex formula that I use an Excel spreadsheet to help me add or subtract value based on the differences and condition of each home in comparison to the Hemet home my buyers want to buy.
Market - From the data I collect, an important part of the analytical process is to understand and gauge the current market condition and look at the trends to determine the strength of the market.
Condition - Finally not only do I have to make adjustments for the physical characteristics of the Hemet comp properties in my CMA but I must determine if there are differences in the overall condition and the amenities each of my comps offer. For example, if the home we want to make an offer on does not have granite counter tops but the one that sold just like it up the street does, then we need to deduct the value of those countertops. If one home is immaculately landscaped with several yards of concrete and another still has a builders dirt back yard - than again adjustments must be made in the value each comp is assigned to offset the difference in the value between both homes.
So, you see, there is much work that must be done once a suitable home has been selected by the Hemet homebuyer and this is why a professional Hemet CA REALTOR® is the best ally a Hemet home buyer can have - whether that Hemet home buyer is a first time buyer, a move-up or move-down buyer or an investor looking for that special wholesale deal. And this is why it is so important to not get emotionally attached to any Hemet property for sale and to have a Plan B and even a Plan C in the pipeline. Remove the emotions from the equation if you want to buy it right.
Please make sure you check back often for more articles on Back to the Basics to hone your real estate skills and knowledge. Although this series of article is geared towards other Real Estate professional (except those in Hemet - please don't read this) it is published for the public to read it. My thought is that if the public can see what we do, they can hold us accountable and select a REALTOR® based on our skill set and services we provide and not how much cleavage we show on a billboard.
So, Until Next Time,
Have a Blessed Day,
by John Occhi, Hemet REALTOR®
All Content Copyright Protected © 2007 - John Occhi, Hemet CA REALTOR®
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