When I meet with prospective home buyers, one of their first questions is inevitably, “How low below the asking price should I expect to pay?” My answer is always the same… it depends! Some homes are priced fairly and others are grossly overpriced. I cannot recommend a generalized strategy as we need to weigh the merits of each home individually against their prices.
When my team and I work with a seller to list their home, our strategy is to determine the home’s approximate market value, and then offer it for sale for as close as possible to (or even slightly below) that number. This strategy is especially important in a declining market. If we were to tack on an extra 10% of “wiggle room” onto our asking price, and then the market dropped 5%, we would be 15% above the market. The larger the gap between market value and asking price, the greater the chance that the right buyers will not see your home. Rather, buyers in the market for a more expensive home will see yours, and it will pale in comparison to the competition. The most effective strategy is to price slightly below the market so your home is the “best in its class.”