A few years ago when the average time to sell a house was shorter than the current 9 months, a much different type of valuation and expected sales price was in place. One could normally expect to pay about $100k over the assessed value when purchasing a given property in Massachusetts. My, how times have changed.
In today's buyer's market where there is a glut of homes for sale and not enough qualified buyers to buy them, sellers feel rather lucky when they get $10k over assessed in many towns. Indeed, many homes today are listed at under assessed value in the hopes of a quick sale. Of course, in places like popular seaside towns and some affluent areas of Boston and its immediate suburbs, the market stresses that everyone else feels are not as evident. Though, the vast majority of sellers are forced to continue to drop their asking price if they want to have any chance of attracting a buyer.
A parallel of the not-so-recent shift from seller's to buyer's market has been the change in bidding/offering strategy for buyers. No more than three years ago buyers would be laughed out of the building if they offered much less than 95% of the asking, or list, price. It was typical to see many full-priced offers during a time when interest rates were extremely low and buyers' appetites for space and luxury were bigger than their pockets. Agents would commonly recommend that their buyers offer 96-98% of the list price if they wanted to come across to the seller as legitimate.
Today? Not so much. It is becoming more and more common for buyers to offer only 90% of the list price with their initial offer. To see how much pricing and bidding has changed, let's look at some hypothetical numbers. In 2003, a seller prices their home at $300,000. Depending on their location, quality of home, etc. etc., a buyer would offer anywhere from $285,000 at the low end (95%) to $294,000 (98%), and in many cases, full asking price of $300k. That same seller in the same neighborhood with the same house could expect, and should expect offers ranging from $270,000 (90%) to $282,000 (94%). That may not seem like much of a difference, but imagine if it were your home on the market and you received $25,000 less than if you had sold three or four years ago. Also take into consideration the fact that $300k is on the low end of home prices in this expensive state of Massachusetts.
All in all, it's a great time to buy in many areas, and sellers are increasingly negotiating with "lowball" bidders who they would have completely ignored just a short time ago.
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