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In other words, how often do buyrs pay the asking price? We are getting ready to list our home and my DH thinks the price the realtor suggested is too high. I have a low number that I dont want to go below of course. So i am just wondering if buyers automatically assume they can take 1% off the ask price and still be in the ball park.
I think it really depends on the market you are in. Unless it is a super hot market, I would never start with an offer of full asking price unless the market indicated that is what was needed to definitely get the house. In my price range in the Raleigh area, for a house recently put on the market my first offer would probably be more like 3%-4% below asking price and see what the sellers counter with. That of course assumes the house was priced correctly to begin with based on the comps in the area. If a house has been on the marekt for several months (Like 4-6 months), I personally would consider offering even less of the asking price...
Last edited by North_Raleigh_Guy; 03-04-2007 at 07:52 AM..
In general, although it all depends on your neighborhood, etc seller's get about 97-99 percent of asking price. Did your realtor show you the comps in the area? Is your house really comparable, as in does your house have the typical standard for the area or does it lack some things? Are there things in your house that you have added that add money to the bottom line?
Typically, the clean, well maintained homes in convenient location, good school district, that has the typical upgrades and nothing that "stands out" will get the 97-99 percent of asking price.
Ask your realtor to show you the closed comps for the area, it will show you the list price versus sales price of the homes in your area. That can at least give you a ball park.
Definitely keep that "we will not go lower than" number in your head as it will help with negotiation. Now, on the flip side of that, I have seller who had a "we will not go lower than" price and got an offer that was 3000 below that. They didn't accept it, but in turn lost the house they wanted because they haven't sold their current house yet. For them, the 3k was worth it, but always look at every offer very carefully and make your determinations at that point.
being a current home "seller", I think we would entertain any "reasonable" offer. You can always counter offer. I think you have to look at how much a few thousand is worth to you. Would you want to pass up a sale for a thousand or so and continue having to keep your house emaculate, disrupt the kids and the general stress of selling a house? Again, unless it was a true insult, we would probaboy consider a good offer
As others stated area is important to consider. But price point is also important to consider. An offer that is 98% of list price for a home listed at 325,000 might seem reasonable. Whereas 98% of list price for a home listed at 525000 might seem like an insult. I think it just depends on the area and price range.
It also depends on whether you're willing to walk away from the house. On paper, negotiating based on the percent of asking price seems so simple, and it is your agent's job to help you keep the emotion out of it. However, as a buyer, if this is THE HOUSE, then a full price offer on a house that is priced correctly doesn't mean you've "lost" the negotiation. There are so many things that can be negotiated besides the selling price, too! Do you need a more flexible closing date? closing costs? those appliances that match perfectly? a contingency until your house closes? If you need the seller to be flexible in other areas, then a full price offer may strengthen your position.
Otherwise, as pp said, general rule of thumb is 1-2% of asking price.
My impression of the home buying and home selling process (did both last year) is that the buyer will try to lowball you. The way the housing market is right now you can expect that. However, setting your price much higher than you expect to get, will eliminate a lot of people who search for homes in a certain price range and may not even see yours. i.e buyers may go online and do a search for homes within the 150 -200K range and if you're at 215 hoping to get 200 they won't even see your listing.
But, expect a low offer. Sellers are hurting right now and people will try to get the cheapest deal that they can.
In general, although it all depends on your neighborhood, etc seller's get about 97-99 percent of asking price. Did your realtor show you the comps in the area? Is your house really comparable, as in does your house have the typical standard for the area or does it lack some things? Are there things in your house that you have added that add money to the bottom line?
Typically, the clean, well maintained homes in convenient location, good school district, that has the typical upgrades and nothing that "stands out" will get the 97-99 percent of asking price.
Ask your realtor to show you the closed comps for the area, it will show you the list price versus sales price of the homes in your area. That can at least give you a ball park.
Keep in mind that these numbers and ratios are usually based on the last list price before the property actually sells. It normally doesn't include price drops. So if a seller lists and then drops the price 20% before getting a 5% off offer, it'll show up as a 95% of list sale. That's true, but it doesn't tell you much other than sellers have to get their prices realistic before buyers will even bother with them.
Anyway, smart buyers aren't going to make an offer based on your list price. They'll make one based on the recent sold comps in your area. Using these comps, 1% off might be in the ball park or 25% off might be. Deciding on an asking price doesn't change the reality of the market. Ask the agent what comps they used to come up with the price they're suggesting and see what they say.
Sellers, even in the strongest markets, need to price BELOW comps. Buyers understand that homes are losing value every month and a comp from 2 or 3 months ago is meaningless.
Sellers should be realistic and scrub their market for data on COMPARABLE homes (meaning unbiased comps) that are on the market and then price far enough below that to catch the buyers attention.
Or, you can try to squeeze every nickel out of your house and ride the wave down to the bottom.
In S Florida (Miami/Broward/Palm Beach) - try 10-15% below. There is just way too much inventory. If they don't like it, move on. Some of my colleagues have paid 20-25% less than asking. Of course, some people down here refuse to believe their house has gone down in value over the last few years and have over priced their houses 20-25% to start.
There really isn't a "correct market" down here. One block with cookie cutter identical homes will have 4 homes for sale.
1st - 325k
2nd - 280k
3rd - Foreclosure - 250k
4th - Short sale - 220k
With comps ranging from 220 - 400k over the last 12 months.
How can anybody really know whats the value of that house?
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