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I am relocating from Mass (I know another Yankee). I was wondering about asking price versus a bid. I know that in this area near Boston, you pretty much had to pay asking price. My sister just moved to Atlanta from Maryland and they said that the bid for their old house and what they bid was about 20K less than asking. Is that the norm or is it higher/lower in the Raleigh/Durham area?
Thanks, I know I will have a million questions. This forum has been an amazing resource for me so far, time for me to stop lurking.
The realtors on this board will probably tell you houses in this area sell for 98% of their list price. I think that's an over simplification.
I've seen houses sell for 100% of their original asking price within a week or two of being on the market. I've also seen houses sell for 90% of their original asking price after being on the market for 4 or 5 months. It all depends on how accurately the listing agent prices the house, how badly the buyer wants the house, and the price of tea in China
The realtors on this board will probably tell you houses in this area sell for 98% of their list price. I think that's an over simplification.
I've seen houses sell for 100% of their original asking price within a week or two of being on the market. I've also seen houses sell for 90% of their original asking price after being on the market for 4 or 5 months. It all depends on how accurately the listing agent prices the house, how badly the buyer wants the house, and the price of tea in China
It still comes down to common sense. Do your homework, find comps based on recent sales and current inventory, figure out what you consider to be a fair offer and go with it. The house I'm buying in Raleigh is selling for 9% less than what the owners originally had it listed for six months ago.
There isn't a formula to be used (e.g. 98%). Most Realtors want to facilitate a deal and so they're inclined to get the initial offer into a range where a sale price can be negotiated quickly (2% is a safe reduction, no buyer would be offended). That's not to say they want you to spend more money, it's just in their best interest to help make a deal happen for a property that their buyer wants. Everyone wins.
Based on my experience I would recommend you go with what makes sense to you and ignore the myth that different rules apply to different markets. As someone who is also selling a house I can tell you that when the initial offer came in at nearly 10% below listed price I was far from offended. I simply had to decide if I wanted to negotiate or not.
The $20,000 difference your sister mentioned is somewhat meaningless as we do not know the List Price of the home ane we don't know the offer.
The proper process is to do a Comparative Market Analysis and arrive at a proper price range for the home. That CMA range should be fairly tight. Say $410,000 to $415,000, not "Somewhere between $395,000 and $450,000."
Your offer should be somewhere in that range, or close to it.
If you are obviously lowballing, you may disqualify yourself from serious consideration. It is reasonable to assume that you are just throwing numbers out looking for a desperate Seller.
While it is oversimplified to say that homes sell for 97% or 98% of listing price, it is also amazing how often that is an accurate picture. But approaching the offer formation that way is going at it backwards.
Your agent should start with the CMA. If the numbers don't jive with the List Price, then it is reasonable for your agent to call the Listing Agent and ask how the price was set, asking for the comparable properties.
I recently sold one that some folks comped at $106/SF. They were using a non-MLS listed property that had flipped and the tax rolls were wrong, missing the 2nd sale.
That earned my Sellers about $4.00/SF. And some Buyers and Sellers do not allow for appreciation. Factor in approximately 4% to 5%, et voila! A fair price. And the home sold just over asking price with three good offers on the table.
Do the homework on recent sales for comparable properties and make a reasonable offer near or in the range of the comps, and notice how often the 97%-98% number holds true.
Of course its not that simple! However, once a home is priced right...if you look at LP vs. SP, you'll see its about 98%!!!
The reason we try to educate our buyers is that if you make a low ball offer, you are just going to annoy the sellers and then when it comes time to ask for repairs, it just makes it more difficult.
Having said that...I looked at comps on a house last week. Seemed to me to be over priced so we went in asking for $10,000 off price of $190,000. Seller came back and said "no way". We then bumped it up $5,000 and seller was ok with that. Its not "rocket science" but its the way we negotiate here. My Long Island clients say in LI, they can get $30,000 off on a house. Well if you KNOW the seller is going to come down $30,000, WHY do they list it that high? Its all CUSTOMARY for the area. The point is to find a Realtor that understands how its done here so that its beneficial to the buyer.
Most the homes are NOT priced correctly in MA. It wouldn't be unusual for someone to offer $30,000 less. 12-18 months ago it would be more common to offer 10k less and meet in the middle at 5k less. Then the market really slowed down. But sellers are not facing reality. I've seen many properties listed over a year! Lower the price people! Nope, it's not rocket science.
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Well if you KNOW the seller is going to come down $30,000, WHY do they list it that high?
If you are obviously lowballing, you may disqualify yourself from serious consideration. It is reasonable to assume that you are just throwing numbers out looking for a desperate Seller.
Lowballing is no the only way that makes a buyer look desperate. We received multiple offers on our house in Portland and one offer included a check written to us personally. If we accepted their offer in the small window of time that they gave us then we got to keep this $500 check. I wanted to reject the offer based on the "used car salesman" approach. But our realtor explained it was the buyer's realtor's idea and he was young, green and overly excited. So we didn't hold it against the buyer but we did return the check. Now, if the buyer had only offered to wash my laundry for a week.... that would have impressed me.
Also, find out the customs of presenting an offer in the area. Here in our neighborhood in Portland the buyer usually writes a personal letter to go with the offer. My Durham Re Agent had never heard of that so I opted to forgo the letter. I did not want the seller to think I was a weirdo. However, I bet people might write letters for those ITB houses and Trinty Park houses that go within days of listing. If not, it might give you a leg up. I do think if the house has a sense of long term history then the letter is a nice touch. Then again... maybe I'm just a weirdo.
Wow, I am really suprised to hear of that Portland custom of writing letters with a bid-it just seems kind of weird. When we sold our house, we had three offers, and I didn't know, or care to know, anything personal about them. If someone had sent me a letter, I'd see it as odd and overbearing.
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