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Save money by knowing the home’s history before making an offer.
It is hard to know the right price to offer on a home and mistakes can be costly. There are many factors that affect your offer. One of the most important factors is the home’s history.
Here is an example of why this is so important. If you are thinking of making an offer on a home, one thing you will look at is how many days the home has been listed. If it was listed just a few days, that tells you that the seller will be less flexible in price vs. if it has been listed for many months. However, without knowing the history of the home, you could be wrong in your analysis.
Many agents will relist a property under a new MLS number for numerous reasons. One reason might be to hide the sales history as relisting with a new MLS number will erase the history on most Websites.
Perhaps the property was on the market for 6 months and did not sell. The agent then lists it under a new MLS number and now you are looking at this new listing just 5 days on market. You might be thinking the seller won’t take a lower offer because he just listed it, but looking back at the history will show you it has actually been on the market for 6 months so the seller should be motivated with a lower offer.
Below is an example pasted from my Website OahuRE.com. Looking at the first line in the blue, we see this property was listed on November 4, 2009 at 10:36am. So just looking at this information tells us it is only 4 days on the market as of November 7, 2009 when I copied this.
Looking at the history from previous MLS listings in the grey lines below tells an entirely different story. This home has actually been for sale for almost 2 years now, starting at a much higher price of $4,200,000 vs. the $3,199,000 that they are currently asking. So in this case looking at the history tells us this home has dropped $1,000,000 in asking price over the last 2 years. This tells you the seller is motivated to sell but unfortunately seems to be following the market down with their pricing which, so far, has always been above what the market is willing to pay.
It is important to know what the seller paid for the home.
The history can also show you other important information. For example, perhaps the home was purchased within the last 4 years by the current owner. Knowing what they paid for the home when they bought it is another important factor. Most sellers will try not to lose money on the sale, so this gives you a clue into what they might be willing to accept as an offer. It also tells you if this could turn into a Short Sale at a certain price point.
The home below shows that the seller has dropped in price twice and the current asking price is significantly below what they paid for it in February 2005.
Another piece of important information you might get from the sales history is previous price drops. Many times when homes were listed before and did not sell, there were some price drops to get to the current price. This pattern of price drops helps you understand how motivated the seller is. For example, if the price is not dropping at all they might not be so motivated, but if the price has dropped several times and is finally getting in the range of the market value, then you probably have a motivated seller.
Has the property fallen in and out of escrow multiple times?
You also want to look for houses that have fallen out of escrow multiple times and again, unless you look at the history, this could be hidden from you. If a house falls out of escrow multiple times, there could be a reason for this. Perhaps it is in worse condition than the initial showing reveals but during the home inspection the true condition comes out and it causes buyers to cancel the escrow.
At the very least if the house has fallen out of escrow multiple times, you want to ask the Realtor representing you to look into why this happened so you are better prepared and can adjust your offer accordingly. If there was major hidden termite damage that does not show up until it is inspected, you can factor this into your offer price so this way, when it does come up, you are prepared for it and might not have to ask for as large a credit from the seller.
Below is an example of a home that fell out of escrow twice along with price drops from previous listings, price drops for this listing, plus most recently a price increase.
So you can see there are multiple reasons why knowing the homes listing history is an important factor to consider before making an offer. If you have any questions, you can go to my Website http://www.OahuRE.com and hit the contact page to Email me.