One of the things that I constantly talk about on OC Voice, is the need to be an educated buyer or seller. My goal is always to provide information that helps to educate my readers about what trends we are seeing - without putting you to sleep. Heck - I still want you to keep reading and I know statistics are boring.
So today - I had an interesting conversation with an agent regarding her philosophy about showing buyers property. I'll be honest, I'm a little shocked by the philosophy. She shared with me that she shows her clients homes that are up to $50,000 outside their budget because of course, 'in this market, there is room to negotiate.' Okay, fair enough. This isn't the strongest market, but I'm not biting. Let me explain why....
- In the price range her clients are in, there is very little inventory. In addition, if they are hoping to avoid a short sale purchase, and want a bank owned home or an equity seller, that accounts for approximately less than half of what is on the market. There is competition for the quality product.
- The closed sales in the area are selling at 98.65% of list price. In this instance, the buyer's agent is hoping to negotiate 17% off list price. Based on local numbers, I think it's fair to say that it might not be a realistic method of searching.
- Average time on market in this area, at this price range, is 60 days. This is a far cry from a buyer's market. However, going into the higher price points - then it becomes more of buyer advantage.
- This strategy has nothing to do with value. What if the home was listed 10% below current market value? Isn't that already a good deal? What if the home were $50,000 overpriced? That certainly isn't the good deal that they are hoping for.
- Lastly, why show a buyer a home that is out of their price range? Long term, this isn't fun for anyone.
The key is to understand the details of the market you are buying or selling in - not just an overview. All of Orange County is not the same. Each city is different and each price range is different. It is critical to understand the market within the larger market.
Again, the message is to be educated about your market. Don't let mass media, your friends, or even your agent be your sole source in your decision making process. Let the numbers speak to you because without fail, they're telling you a story.
Originally posted on OC Real Estate Voice
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