How Much Can I Get That Home For?
When working with buyers, we are often asked this question and the simple answer is this: we don't know!
I realize it may sound shocking that someone who professes to be a real estate professional would openly admit to not having an answer about something related to real estate, but the answer is complicated.
The final purchase price of a home depends on many variables, the most important being the sellers motivation. However, until the negotiating process has been played out, there really is no way to determine what a seller will accept for their home. In many cases, even the seller doesn't know what they will accept until they have received an offer and crunched the numbers.
I realize that buyers want some level of certainty and would feel more comfortable knowing everything up front. Sure, it would be great if the listing you saw on line read, " great home, priced at $199,999, but the sellers said their bottom line is really $170,000." Unfortunately, it just doesn't work that way. However, we do have some thoughts on finding a home's value that may be helpful.
To begin, market statistics mean alot as they are based on cold hard facts, not opinions. Here are statistics from home sales over the last 6 months in some popular Eastern suburbs here in Cleveland. The figures below show the relationship between average final sales price vs. average final list price:
Beachwood - $278,911 / $299,338 = 93.18%
Moreland Hills - $316,632 / $334,611 = 94.63%
Pepper Pike - $338,072 / $358,562 = 94.29%
Orange - $245,242 / $268,198 = 91.44%
Solon - $287,006 / $306,145 = 93.75%
Twinsburg - $211,594 / $221,345 = 95.59%
Based on the figures above, a home can expect to sell for about 94% of the final list price. The challenge can be to determine whether or not a home is price competitively, where it will likely receive an offer, or if it is overpriced and due to be reduced at some point in the future.
We recommend that you educate yourself on the market by seeing a lot of homes in your price range and follow the status of these homes. At some point, you will have seen enough homes that you will be able to walk into a home and know if it is a good value. However, other buyers will recognize this too, so if you find a great home at a great price, don't delay for risk of losing it.
If you are a buyer expecting to get a home for 20% off list price, it probably won't happen on a home that is the nicest in it's price range. However, if a given home appears grossly overpriced based on comparing it to others you have seen, there certainly may be more negotiation room here.
One thing to note is that some sellers know their home is overpriced but just don't want to lower it. They may be open and expecting to negotiate, so don't let a price keep you from trying to buy a home that you really love.
More important than determining "how much can I get that home for", is using statistics and market knowledge to determine "how much a given home is worth to you", because that is really the question that you should be focusing on and can be answered prior to beginning negotiations.
When all is said and done, learning the market is important and having a knowledgeable agent to guide you throught the process is critical to your home buying success.
About The Authors:
This information is provided compliments of Amy and Dan Schuman, The Schuman Team Keller Williams Realty. The Schumans service both the East and West sides of Cleveland and have worked with numerous professional athletes, business owners, and executives who are relocating to Cleveland. They specialize in the Cleveland Ohio luxury home market and also enjoy working with first-time buyers as well.
If you are looking to buy or sell Cleveland real estate, including the surrounding suburbs, please contact the Schuman Team at 216-346-3235.
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How Much Can I Get That Home For? is the property of The Schuman Team and may not be duplicated or used without their written consent. ©Dec 2009
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