St. Thomas Real Estate Trends

Okay, you found your dream place in paradise! Now what? I am always asked - "how much should i offer?"

One of the hardest, most important decisions homebuyers face is how much to offer for a property.  It's not rocket science and it shouldn't be frustrating or make you crazy. There's really a pretty short list of steps you need to take to make a smart offer – one that gets you a great value, but is also likely to be successful at getting the property. (A low offer does not make for a great deal if you don’t get the house!)  And most of the same steps apply to sellers trying to set the list price that will lure the most buyers (and net them the most cash)!

Step 1: What do the “comps” say?  First things first. When it comes to pricing a home, or making an offer to buy one, the ‘first thing” is the home’s fair market value. Both buyers and sellers should work with an experienced, local agent to understand what the home’s value is. Most agents will do this by offering you a look back at similar properties that have recently sold in the neighborhood – i.e., the  comparable sales, or comps.
HINT: You can also find comps for a home listed on sites like Trulia or Realtor.com. There's all kinds of practical advice that may apply to stateside properties that are totally useless when it comes to island properties. That doesn't mean you don't ask for things like "properties sold" information but it does mean that you shouldn't be surprised that you may have to be a little more creative or "look back" further than a few months. Our properties tend to be "unique in character" - not your subdivision cookie cutter/development property and they are on the market for a lot longer than stateside properties. Bear in mind that the "caribbean" is a "want to" NOT "have to have" purchase. However, like a stateside purchase, if  you do get into contract, these may be the same comparables which will be considered by the appraiser, so looking at them before making an offer can:

(a) provide factual support for a lower-than-asking offer or for the asking price, in a negotiation, and  (b) result in a sale price at which the property will actually appraise, later on - avoiding the common glitch of the deal falling through because the appraisal comes in way below the agreed-upon price.

Step 2:  Ask yourself, realistically what can you afford?  This step is much more critical for buyers than for sellers. (Unfortunately, sellers, the facts that you need to net a particular amount to buy your next home or pay your existing mortgages or credit card bills off has no relationship whatsoever to the price at which you should list or will sell your home.)

Buyers – it’s a must to make sure that your offer price for any given home falls within the range of what is affordable for you.  This includes offering a price within the range for which your mortgage was preapproved, but also includes making sure that the monthly payment and cash you’ll need to close the deal (down payment + closing costs) are affordable in light of the particular house. Consider property taxes, are there special home owner fees? will the condo association vote on a special assessment?

Step 3: What’s your competition? (And what’s theirs?)  This is another step at which it’s critical to check in with your agent. You need to know what level of competition you’ll face – whether you are a buyer, or a seller.  Check out how many comparable homes are listed , how long they have been on the market and if there have been price drops along the way.

Work with your agent to understand the list price-to-sale price (LP:SP) ratio , which lets you know how much under or over the asking price properties are selling for; the higher the LP:SP ratio, generally speaking, the less competition there is among buyers. 

Also check:

The number of offers – if any - that have been presented on the property (which the listing agent SHOULD tell you). 

The number of days the home has been on the market, relative to how long an average home stays on the market before it sells.

Has the listing agent informed you that her clients are highly motivated, flexible or have an urgent need to sell?  

For immediate assistance please call Justine (340) 690-6900 - a quarter of a century of island life can benefit you!

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