Asking Price vs. Sale Price

[Sailaway50]

There is so much inventory, it doesn't make good $$ sense (or seem necessary) to "fall in love" with a house.....and potentially not take advantage of the buyer's market. Obviously, YOU know your upper and lower price range. Stick with it. So what if the owner is "offended" by a low offer? He or she may just come back to you in a month after suffering thru no further offers.....learning curve.....

I don't know if a realtor would tell you re previous price reductions....are they bound to, if you ask? Very important consideration when looking at "asking vs selling" stats.....

[middle-aged mom]

A good Realtor should be able to show you the comps for the area.

A good Realtor should also be able to demonstrate the low, avg, median and high price per square foot for these comps based upon above grade finished space. This information is available in the county tax records.

A good Realtor should be able to describe the interior of any recent comp property and best case tell you why a home sold for the price it did, when it did. Some homes sell for more than expected, even in this market, because the buyer, often an inbound relocating family needs to buy something. Conversely, some homes sell for less then expected, because the owners need to sell immediately. Both scenarios are extremes.

If your Realtor is not willing to do this kind of homework for you, find one who will. And when you do, execute a Buyer's Agency agreement with them as a measure of good faith.

A good Realtor will ask you to get pre-approved for financing before going to work for you because it makes no sense for the Realtor to invest time in someone who may not have the financial ability to buy something.

[hlachel]

Originally Posted by futurecitizen

Can anyone speak to the ratio of sale price to asking price in Chicago areas like Evanston, Oak Park, Arlington Heights, etc? How much less can you offer? I don't really trust realtors to give me a real price, as they are obviously invested in keeping the market high. I'm more interested in word of mouth stories of asking prices versus sale price. It seems like many properties are sitting on the market for months...

Dear Future Citizen,

I respect your opinion that you do not trust realtors, but I'd like you to know that Illinois is a consumer protection state, and REALTORS by law are required to always work in the best interest of the client. [mod] ad [/mod]

[Glamona]

Everything depends of the motivation of seller. If he is in the certain situation (loss of the job, divorce, investor/builder with too many properties in his portfolio, illness etc.), he might sell for 80% of the listing price. In some situations you might even find someone who would give away a house if someone would just take over his mortgage payments. But this is not a general situation. If you want to buy a house that you really, really like, you will present an offer close to listing price (for example, you might start negotiation with the offer that is $10,000 lower than listing price). If you did not fall in love with the house and it would not be a big deal if you do not get this house, you can start negotiation with an offer that is $20,000 lower than the listing price and see what will happen. And then everything depends where you, as a buyer, and seller will meet.

As far as the comment that all properties are listed for 10% more, you must know that the listing price and sold price are 2 different prices. Everyone expects that there will be some negotiation (the same when you buy a car). You can ask a Realtor to prepare you a Comperable Market Analysis (CMA) for the house that you plan to buy, where you would see what is the maximum/average/minimum of the listing price and sold price. This is how they determine for how much the property should be listed or sold. If the owner updated the property, the listing price will be closer to maximum listing price, but if the property needs some updating, it will be closer to minimum listing price.

[Ben Katz]

HI...First post!

I recently sold my home and got an awesome deal on a home in Geneva and our Agent recommended that we "price our house to SELL"...which was smart. Instead of leaving our house on the market with an inflated price, we priced it where we knew we'd get offers...However, we didn't leave much wiggle-room in terms of negotiating the price...so, even though we priced our home relatively low compared to the other homes (of similar value) that were for sale in our neighborhood, we'd still get "low-ball" offers that were laughable...needless to say, we sold within a couple weeks and within the time that we put our house up for sale, bought a new home and move, the homes with "for sale" signs in their front yards are still floating those signs on huge piles of snow and wondering where all their offers have gone. Most of the homes in our neighborhood have been for sale for 200+ days and that is ridiculous! I don't mind if we priced it $10,000 lower...we are now happily living in our new home and loving the extra space!

BTW, I lived in Glendale Heights (Glendale Lakes Townhome Subdivision)

Later!

Ben

[middle-aged mom]

A home owner has the final say on the ask price and may ask anything he/she wants for their property and some do, despite the best advice and facts available to them.

In my own sub division, I have seen 20-23% drops in a few ask prices. Some think this is attributed to a poor market. The reality is there was never anything to support the higher prices other than these were the prices, the owners thought were acceptable to them, at one point in time. In other words, they were not defendable by the owners or their respective agents.

No one tends to know the market better than a qualified and serious buyer, working with an agent. They see all the homes in their price range that could potentially meet their criteria and they compare and contrast and buy the one that represents the best value to them. Best value is not the same thing as the lowest priced home.

Conversely, owners/seller rarely know the competition and some persist in the fantasy that their home is better than all others and therefore worth more than anyone will pay for it, given the competition.

Sometimes, owners have erroneous assumptions about the value of their improvements and return on an ivestment. That one installed a new top of the line kitchen in 1988 does not mean much to a buyer in 2008. Know what I mean?

Some homes are selling fast and for close to their ask prices, when the home is priced right, from the very begining.

We all have the choice to get sold or sell the competition, in any market.

[middle-aged mom]

Originally Posted by Ben Katz

HI...First post! Ben

Congratulations Ben. You played a smart game and won. Thank your former neighbors for selling your home.

[middle-aged mom]

Originally Posted by SBurgess

I don't know if a realtor would tell you re previous price reductions....are they bound to, if you ask? Very important consideration when looking at "asking vs selling" stats.....

I would not work with the owner's agent if I were serious about buying a home. In Illinois, this is called dual agency, and the common agent cannot advise the buyer or seller when representing both parties. They can however, respond to all questions, with facts.

Your agent has a fiduciary responsibility to you and is required to disclose what they know. If the information is not forthcoming, ask.

Having said this, I would not assume, right off the bat, that if a price had not been reduced, then it's ripe for a low ball. Some homes are right priced, out of the gate, and they sell faster than the one's that need time to correct.

An agent who knows the dirt, knows when a home is priced right and can demonstrate this to their client. An agent with a right priced listing can also defend it against low ball offers. It's all about the facts.

[Bob from down south]

What you offer should never be based on the asking price, but rather on a thorough CMA (Comparative Market Analysis) of similar homes that have sold in the same area...the "comps" as a few have mentioned here already.

In a slow or dead market, make sure to use comps that are recent and reflect current price trends...a house that sold 6-9 months ago before the credit crunch hit will not probably reflect current valuation.

[middle-aged mom]

I have seen homes sell for as much as 30% off the original ask price, this past year. This is not a reflection of the market but that of the asking price being waaaay out there.

The stats will show the ratio between the final ask and sold price, which was <1%, no different than a home priced to sell, right out of the gate.

What matters is the closed comp price, not the journey to it.