How much should I offer on the house?!

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Even with over 200 transactions under my belt, I remembered the stress that particular question brought me when I bought my current house. It is often hard to overcome emotion and ensure we don't end up overpaying. How do we do that? Pretty simple; Data, Data, Data.

The MLS makes it very easy for us to pull up homes that have sold in a similar area over the course of a few months, but there is so much more that goes in to it. We recently had a client looking in San Jose at the end of last year.  The Listing Agent strategically listed the house a healthy six figures less than the house was actually worth.  It absolutely worked for him because he ended up with over 24 offers. My buyers and I knew this was the case. We knew there was a lot of competition, but the home ticked off a lot of boxes. If you look at my previous Track Record page, you can see I take a great deal of pleasure from having my Buyers procure a house for less than list price. Equally, I like my clients getting the house without paying past comp value. What does that mean?

Reviewing comparables, I examine; 

• Condition
• Location
• Size
• Bed/bath count
• County Records
• School districts. 

I use cost/sq.ft. analysis with an eye on Economies of Scale to determine what the Seller and/or Listing Agent's pricing strategy is.  All of this is done to establish what I call Value Channels (Low, Mid or High). Determining how much competition we think we will have, will help us establish where in that channel we should swim.  When there is a lot of activity on a newer listing, we try to identify a start point, where we will hopefully at least be part of the conversation. If the listing is stagnant, we can perhaps swim at the lower end of the value Channel. Too low though, and you run the risk of an emotional response from the seller that will kill any and all future negotiations. This is where I look to use the art of the pre-negotiation-negotiation.

Using the aforementioned analysis, we were able to look past the List Price and come up with our own number. Given the properties I identified as comparables, we felt confident with the offer price and terms. We beat out the other 23 parties, but most significantly, the house appraised for the number we offered.

Let's schedule an Advocate Compatibility session for me to go over that in person with you.