When it is time to make an offer on a property in Miami, many people believe that it is good to make an offer way below the listing price. The thought is always the same, that a magic percentage would do the trick and start a conversation about the final price.
The truth is, most prices follow a very strict calculation, and specific licenses are conferred to professionals, such as appraisers, that allow them to come up with the right value for a property. Real estate brokers can also provide the same analysis, comparing the subject property with others in the market.
This analysis takes into account at least three properties sold in the past six months and two that are currently for sale with similar characteristics. It is possible to add more properties that were recently sold or more properties currently on the market; the more similar to the subject property, the better.
In absolute terms, many factors affect the price of a property:
- Location: Without a doubt, there are areas that are more desirable than others, especially when there are retail stores, luxury brands, and shopping nearby. Also in high demand are those properties near the beach, golf courses, or the intracoastal.
- Story and Layout: The area of the apartment will help determine its price, and the bigger the area, the bigger the sticker price. The same apartment in a higher floor will cost more, and the same layout, with a better view will command an even higher price.
- Terraces and View: It is common in a building to have many different layouts, some with the same square footage. A direct ocean view will always be more expensive than a side view, and a view of the ocean, intracoastal without any obstructions may also be very desirable, therefore command a high price.
- Private Elevators: Some buildings offer many elevators and private entrances to some units and some units share the same elevator entrance. Those with private entrances are more expensive.
- Technology: Some buildings today have concierge services that can be requested via iPad that also controls the unit’s air conditioning, TV stations, temperature, and some other appliances. Some apartments might opt out, since there is an added cost to this service.
- Security: Some properties offer 24/7 services to their owners and maintain their owner’s privacy. Electronic keys, automatic parking, biometrics to enter certain areas are all prized amenities.
- Garage: Most of the properties in Miami come with a deeded garage and valet parking. Depending on the size of the house, at least one covered car garage is common. Newer buildings offer a second spot, robotic garages, and parking right in front of the owner’s living room.
- Amenities: The amenities in a building or condo association affect the price of the property. Most of them offer the basic gym and a pool, but in addition to those, many offer other sports as well. There are buildings that provide yoga and pilates classes as well as a whole host of spa services including massages, manicure, pedicure, and personal services. Other amenities can include breakfast, happy hour, wine tasting, movies, pet and pool services, package shipping, and an entire list of concierge services.
- History: The price of an apartment is directly related to the past sales in the same building in the last six months. For example, if the building had trouble with their financing and lost the unit to the bank, automatically all other properties will be affected by this event. For the same reason, if no sales were made in the last six month in the building, it is an indication that its owners are financially stable and like living in this location, which makes the value of the property go up.
All these factors contribute to determine the price of an apartment. Sometimes, its true value is what the buyer sees in the property, independently of all these criteria. It might even be sentimental value, but the true value of the property will be determined at the time of closing.
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