A seller can use comparable sales to justify his or her asking price to the buyer. However, ultimately, a buyer will pay an amount the buyer believes is a fair price that the seller has agreed to. You would never get a buyer offering more on a house, unless it is best offer, or auctions. Buyers generally want to pay less.
Buyers sometimes worry that they will pay too much for a home. This can also lead to buyer’s remorse, especially listening to many other people opinions, and they are buying in a real estate market in an uncertain economy with different media opinions. No buyer wants to find out the home he or she just purchased is worth less than its original price. Even if a good home, in a good location, will eventually recover as things improves. Meanwhile, they do not consider they are enjoying their new home as this occurs.
Remember, too, generally speaking, it takes usually 5 years to see some equity in a new home. If purchasing through a promissory note (mortgage), a bank’s appraiser enters the picture. This may be a good reason if buying with all cash, make sure the buyer agent does a comparable (CMA) before the offer.
The Buyer would want to protect themselves as Banks do, in protecting their investment and the security for their investment. That’s why banks hire an appraiser at the buyer’s expense to determine and justify value. Even if the buyer and seller already agreed upon the price. However, appraisals are an opinion of value. An appraisal is only as good as the experience and knowledge of the person who prepared it of the area. The same can be said about CMA’s. If the buyer’s appraiser submits a low appraisal, the seller has the option to lower the sales price.
If the seller refuses, that’s when a buyer might contest the appraisal. Buyers can contest the appraised by submitting comparable sales (CMA). However, I used a method, when writing my contracts that can protect the price accepted between the Buyer and seller that the bank will accept.
I also do a comparable, before making any offers. This is why it is important to never buy a house through a listing agent and work with an experience agent. While it is possible to adjust an appraisal for outstanding factors when the comps are few and far between, the best comparable sales will always be those with criteria that fit most closely to that of the subject property.
Ask your real estate agent to prepare the comparable sales, regardless if you a Seller or buyer. Remember too, the CMA is only as good as the experience and knowledge of the person who prepares it.
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Till Next time, we will find your place in the Sunshine State,
Ronald (RealtorRonW) Wolchesky
Realtor Ron Group Cell: 239-209-1923 Home: 239-349-4684