As I mentioned in a previous post, there are around 700 homes for sale within a 10 mile radius of downtown Grand Rapids. So when you find one you like, how do you decide if it’s “the one”? Last week I discussed inspections. Having professional inspections done will ensure that you aren’t going in blind and gives you the chance to back out, should something major come up. But what about values? How do you get a good deal? In today’s competitive market, prices are inflated and buyers frequently have to offer above asking price in order to get their desired home. How do you know if the price is right?
Comparative Market Analysis
When we think we want to make an offer on a home, I will prepare a comparative market analysis (CMA). The CMA involves searching for comparable homes (comps) that have sold recently near the home in question (subject property). For instance, if we are looking to purchase a 3 bedroom, 2 bathroom house on 0.5 acres built in 2000, I will search for other 3 bed, 2 bath homes on 0.5 acres built in 2000 within a few blocks and of similar condition. Now, there are some factors which affect the ability to do a CMA. For more rural areas I might have to expand the search area. For unique or custom homes I will look for other houses as similar as possible. But after we find a list of comparable homes I will make adjustments as necessary in order to, as much as possible, compare apples to apples. By doing this, we will be able to come up with a specific range of which the subject property is worth.
This is the best way to make we know what the value of the subject
property is. We then weigh this information with 1. How badly you want the home 2. What is the appeared demand for the home and 3. Looking at the future (is the market trending up or down, are we about to peak or bottom out, how will values react to improvements in the home, etc.) This will give us the information needed to empower you to decide what price you want to offer on the house.