By: Tony Meier
How Much Should I Offer?
I am often asked by my clients, “How much under the listing price should we offer?”
This is an excellent question. The answer is difficult.
The main reason I emphasize the education phase of looking at homes is because that is the best way for you to know values. When you review and study 40 – 60 (or more!) listings, then drive by 10 – 20 and look at 5 – 10, you will recognize the “Hot Listings.” You’ll also recognize the "dogs".
Sellers price their homes differently for 4 basic reasons:
1. Ridiculously Overpriced!
These sellers have listened to a real estate agent over-inflate the value of their home in an effort to obtain a listing. There is a natural tendency on the part of sellers to list with the real estate agent who gives them the highest promise. There is a tendency by some real estate agents to give the seller a high “value” in an effort to obtain the listing.
These homes can be 10-20% overpriced. These sellers may need a “dose of reality” for a few months before they begin to realize that their home is way overpriced as compared to others in the area.
The longer an overpriced home is for sale, the more likely I can get the seller to face reality and sell at a fair price.
2. A Little Overpriced.
These sellers fall into 2 categories:
* Those that feel their home is worth every penny of their asking price.
* Those that want to leave a little “negotiating” room.
These homes can be 4-10% overpriced. This amount may be just enough to keep a property from selling.
3. Priced At Fair Market Value.
These sellers have carefully and realistically studied other homes for sale. They have priced their homes very competitively. These homes usually sell within 4 weeks at or very near the listed price.
4. Priced Below Fair Market Value
These homes are priced below value. Perhaps the seller wants a fast sale. Perhaps the real estate agent recommended too low of a price. These homes usually sell within 7-l0 days, at or above the listed price. There are usually competing offers.
Type of Market
The type of market can also have an extreme impact on pricing and values. For example:
* In a “sellers” market, many of the properties will sell at our above the listed price and in a very short period of time.
* In a “buyers” market, many of the homes will sell below the listed price and will take considerably longer to sell.
My job is to ensure that you have the tools and information you need to make an informed decision. To know whether you are in a “sellers” or “buyers” takes in-depth, statistical knowledge of the specific area and price range. Only then can we know how accurately the home is priced.
Seattle’s Eastside Real Estate Resource