I am often presented with the question: “How much do you think the seller will come down?” I get this question from local buyers and from many of the Corporate & Military Relocation buyers I work with.
The most simple answer is “I don’t know”, but as your Real Estate Professional, that answer would be unacceptable. The best answer I can give is “You never know. Let’s find out”. What do I mean by let’s find out? I don’t necessarily mean that we should write a low offer to see exactly how low we can get them. What I mean by “Let’s find out” is that we should do our homework. We should study the comparable sales in the area to find out what we feel the home is worth. By studying the most recent sales in the immediate area, we are able to see the following information about the comparable homes that have recently sold:
- Original List Price
- Final List Price – if there were any price reductions
- Sales Price
- List:Sale Ratio – the difference between the list price and sales price
- Days on Market and Cumulative Days on Market (how long it took to sell)
These are all important indicators when choosing an effective value to offer. The original list price is significant as it shows us, as buyers, exactly how much the seller has already reduced their price. The final list price and sales price are very important numbers as they tell us what the most affective listing price is and what a buyer was willing to pay. The List Price:Sales Price Ratio may be the most important statistic to answer your question – “How much do I offer?” This is our only means to forecast how much a seller may be willing to reduce their price.
There are many other factors to consider when formulating your offer. Should you have any specific questions, please ask and I will gladly post a thoughtful answer.