You found a house you want to own, what’s next? A difficult decision faces aspiring home buyers. Nobody pays sticker price, but how do you know what to offer?
In real estate negotiation is still expected. Even if you’re a repeat buyer, it’s been years since you last purchased a home. This doesn’t inspire confidence that you know the market stone cold. Where do you turn for help?
Your real estate agent can be of great assistance. Knowing certain facts about the current real estate market conditions helps in the discussion with your agent. First order of business is to find out if the belief that sellers overprice their homes is an urban legend. The numbers indicate that it’s not an urban legend, it’s a fact. Do we know how overpriced?
Statistics tracking the relationship between asking price and actual sale price are maintained by the Multiple Listing Service (MLS). I’ve researched this for you and here are the results:
Blue Linerepresents the difference between the original asking price (i. e. listed price on first day on the market) and the actual selling price. Generally two factors account for the difference:
1. Market Conditions – Seller reduces price to attract buyers because house has been on the market for a length of time.
2. Negotiations – Seller reduces price as a result of negotiations with the buyer.
The seller reduces the asking price in stages – sometimes due to Market Conditions and sometimes due to Negotiations. The price reductions don’t occur at the same time. This brings us to the Red Line.
Red Linerepresents difference as a result of Negotiations only.
Now that you have this information, how do you arrive at a dollar amount for your offer? Discuss three numbers with your agent:
1. Blue Line number – Multiply original asking price by percent shown by blue line in chart.
2. Red Line number – Multiply current asking price by percent shown by red line in chart.
3. Market Analysis – Your agent can calculate an estimate of a fair market value by analyzing recent sales in the area.
Keep in mind that the chart reflects the total market in Wake County North Carolina. It’s a guide to gauging the market. Your success in matching chart results varies on factors like…
-- Real estate markets are local – they can be as small as a neighborhood. Prices may drop less in one neighborhood versus the neighborhood next to it. Chart represents a large area (Wake County North Carolina), and the Market Analysis represents a comparatively small area surrounding the specific house you are in process of buying.
-- Owners not all the same – some owners are quite willing to wait for their price and others feel urgent need to move on.
-- You – how willing are you to negotiate or did you just fall in love with this house and you gotta have it?
My goal is to present you with helpful tools. They’re not the only one in the tool box. Your agent has others. Talk it over and let the games begin. Good luck.
Kathy Godin, Award-Winning Loan Officer and Branch Manager
CrossCountry Mortgage Inc.
Where people, not computer robots, answer the phone.
Proudly Serving All of North Carolina