What is a reasonable offer to make on a $260,000 asking price?

By
Real Estate Appraiser with Preferred Appraisers, Inc. (NJ) 42RG00094600

What is a reasonable offer on a $260,000 asking price?
Property in Question: XXXXXX Ave, Sample Twp., NJ


Answer: This is a common question that often causes quite a bit of anxiety. I will answer this question in a general sense since I don't have all the specifics of the property in question.

As an appraiser when I am advising a client I would prepare an appraisal to first ascertain if the property is appropriately priced. If you have toured a number of like competitive homes nearby you might already have a sense that a home is priced competitively and from there you just need to fine tune your offer.

Within that appraisal I would include an analysis of the prevalence and amounts of common and typical sales concessions currently being paid by sellers to facilitate sales. I would consider the median and average "List to Sold Price Ratio" for the subject's market segment for the past 6 months. I also consider the current market exposure period relative to the average and median exposure periods for this market segment. I would then include in the analysis how much competition there is with the home in question and advise my client to base their offer to purchase on a figure derived from the reconciliation of those factors.

If the home appears appropriately priced relative to its peers and there are no unusual conditions then I would suggest they closely follow the List to Sold Price Ratio. If it is more competitive or has some unusual condition I might suggest being more liberal with their offer.

To sum it up

1. Is it competitively priced?

2. What is the common amount in this market, at this time, if any, being paid to the buyers to assist with closing costs? How prevalent is this?

3. How long has our subject been on the market relative to the average exposure period?

4. What is the average and median List Price to Sold Price Ratio for homes in this area and price range for the past 6 months?

5. What are the conditions if any that make this property more competitive than the average home currently on the market?

For example; in the typical situation at this point in time homes in this locale are selling at 96.5% to 97% of final list price. 22% of the homes in that value range sold with sales concessions with the typical being about 2% of sold price. That would suggest that if a home in this locale is appropriately priced (is it?) and has average competition, a reasonable offer would be 95% of List with no sales concessions

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