Do You Want to Negotiate or Buy a House?

Debbie, that's the point exactly!  Those of us to work in the areas consistently know what is happening on a daily basis and can help a buyer make better choices.

Anonymous, you seem hung up on 10% but in fact 20816 was able to command 97% of its list price on average last year.  And the 2008 single family home sales show a 95% list/sale ratio.  Of the 14 sales in the zip code for Jan/Feb, 9 of them are over $1.2M and included some of the oversupply of new construction in the area.  Even that averaged out to about 94% of list price.   A $6.750M home commanded 98% of its list price!  While your comments about an overvalued market might apply to other parts of the county, it's harder to simply overlay that into areas that are holding value better. 

Many of the neighborhoods in 20816 show increases year over year in pricing and further breakdowns by housing type and over/under $1M also show increases.  So it's a disservice to buyers to simply tell them the area is correcting and overvalued by 10-15%.  You will simply put them into the same position as this buyer I wrote about in the blog.  They will be unaware that they can't compete for homes if their offers are that far below asking.  They will have negotiated themselves out of a home.

If a buyer wants a home, then it's best to come see those of us who know the area well enough to command the stats and give good advice about homes.  Sure, let's negotiate where possible and get the best terms and price we can.  Realistically.

I maintain a spreadsheet that has home sales from 2000 to today's date, with subsidies, list/sale ratios, price improvements, neighborhoods, price by style, and price by range.  With this micro view I have a very good handle on where there might be bargains and where buyers are going to be in multiple offer situations.

Laura, very true.  And there is a double sided messsage here....  agents need to learn to be more profitable in the business they take on and buyers need to how and when they can negotiate.  It really comes back to understanding the micro markets and trends well enough to get a good read.  But basically in the case of this post, when there is one home that fits your needs don't negotiate it away!

 I'm finding I'm much pickier about the business I do take. I've never minded working long term and still don't but it has to be with someone who is realistic about the market.  That means we'll take advantage where we can and recognize a good bargain.  I love a buyer who has seen enough to go for value!

Marci,  Thanks!  It's a poor neglected blog at this point and I intend to be more active.   I'd tell any clients I have right now that if they have a need to sell then better the devil they know than the one they don't know.  If that client was ready to make her home a "product" and get it completely ready for market, price it agressively, get rid of the ridiculous "by appt only" mentality and cooperate fully in a sale, then she should do it.  If she's testing out the market to get her price it's probably not the greatest time.

Just my two cents...

Bill, so true!  I wish they could truly see the folly but everyone thinks they can get something for nothing.

Matt, they are simply hovering around waiting to see what happens and generally end up losing out to another buyer.  I've had tons of interest on a listing I have as well and one offer with another hovering.   I'm watching all the price reductions and frankly I think they are playing into the lack of buyer movement because they know if they wait we'll just reduce.  Finding that right price point it just really hard right now!

Bob, it's funny that no matter where we are the buyer behavior is the same. 

Lynn, humans don't seem to change their behaviors in any price range!   I love how you see that sellers have been put through the ringer for this process only to have buyers still want something for nothing.  Don't get me wrong.... I do think prices need to come down, but in many cases even where they've done so buyers still don't see the value and can miss out.

I wrote a full price offer immediately upon a listing coming on recently. Why?  Because it was priced superbly and my buyer recognized that fact and moved immediately!  What a pleasure... 

Ian,

There will always be a divide between buyer and seller as their goals are usually at odds with each other.  I don't think it's so much that sellers want a price from any year so much as buyers are still treating the market as a one place, not as a micromarkets within each city and neighborhood.  Taking the Case Schiller reports and just applying their pronouncements across the board means that you'll miss the trends that exist in the very local area you are considering.  Or for that matter any pronouncements that are made globally.

A year later I wouldn't say this is any different than it was.  I had a recent sale in Bethesda where the folks were working with an agent originally who was a family friend.  They were looking for a very specific price range, in a very specific area that fed a school and wanted enough room to make no more moves until they downsized.  They were told they had all the time in world and could make decisions in their own time.  Two contracts later as they were outbid they realized that wasn't working for them and we began to work in earnest on getting them a home.  Did they pay full price?  No, but they did have to work yet again with a multiple offer situation and structure their contract to be the one the seller took.   It's basically the same scenario as I described a year ago...  Once you have decided where you want to be and find there are very few homes that meet your criteria you need to be focused on getting to your goal, which I assume will be a home.

By understanding the trends in the marketplace you are considering you'll be very well informed as to whether or not a low offer will work for that particular home.   With good advice and a very sound understanding of what homes are going for (or not) in any area, you can make a reasonable offer which one could expect to get through.  I have no crystal ball so I'm unable to say what sellers will and won't take so I always say write something!  But if you just continue to write very, very low offers and get no where with them, then it's time to change your strategy to one of writing contracts to get a home not just use the time as a contract writing excercise.

I wish you luck with your purchase.  I'm happy to help you decipher the market should you find you need that help.

Josette