How much do you pay for a piece of Metro Detroit real estate? How do you decide what to pay?
The worst thing you can do is to just throw out a number. Here are seven criteria to look at when deciding how to bid.
- Recent sold Metro Detroit area home prices. Ask your Michigan realtorto pull the most recent comparables. Let’s say you are buying a Livonia home. What that means is you want to know whatLivonia homes that are like the one you are buying sold for. You want the sold Livonia homesto be within one mile of your prospective home. You want the sold homes to be like yours. If your prospective home is a ranch then you want to compare it to other ranchs. The homes should have sold in less than 6 months. You want to by this piece of Livonia real estate at or below current market price. Let’s say otherLivonia ranches in your area are selling for $110 a square foot, then you want to pay less than that if you want a bargain.
- How long has the home been on the market? Has the Livonia home just gone on the market? Or has it been on the market for the year? The longer the real estate has been on the market the more likely the home seller will be open to a lower offer. However it also depends on how the seller has come down in price. Have the seller only come down $10,000 in a year? (And the Livonia homeis way over priced for the market) Then in my opinion these sellers are just fishing for a dummy. If the seller has continuously lowered the price over the last year indicates that they are trying to sell the home.
- Is the home vacant? Have the homeowners moved out? If the sellers are still living in the house it will be harder to negotiate with than if they have already relocated or bought another home.
- What is the motivation of the sellers? If you can find out why are the sellers moving? Relocation? Divorce? Job loss? Just want to move? Financial hardship? How soon do they have to sell? The people that have to sell or have a time frame are going to be open to an offer?
- Who owns the house? Privately owned, relocation company, bank, or short sale? Relocation company or bank owned will deal better than a private owner. In Short sales banks actually hire a realtoror appraiser to tell them what the fair market value is.
Let’s put it this way. I would put in a low ball offer in on a vacant relocation home that has been on the market for 8 months and has been consistently dropping price. They want to sell this Metro Detroit home. Where it will be harder to buy a Livonia home that is occupied, has been on the market for over a year and the sellers have only lower the price once. They may not be able to take market price because they owe too much.
Some Metro Detroit foreclosures have been priced great. Some banks are listing their homes at below market prices. When a Metro Detroit foreclosure is below market price you can’t lowball the offer if you want the home. Some homes even go at over the list price in those situations. I hope this information helps you.
My quote of the day:
Cause Change & Lead
Accept Change & Survive
Resist Change & Die
- Ray Norda, Chairman, Novell
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