Jim Valentine: Why won’t they come down?
We are often asked why a seller won’t come off their asking price when an offer is made. Sometimes it seems as if buyers expect that a seller must agree to sell for something less than it has been offered for. While homes are often listed high such that it is realistic and reasonable that they would accept something less than the asking price, there is nothing that obligates a seller to sell for anything less than what they are asking.
There are different listing mindsets depending on the goals of the seller. Some list high to see what they might catch with the idea that a buyer, “can always make an offer.” This works kinda sorta, but often simply drives buyers away because of the unrealistic price. Other sellers will agree to list at a low price with the hope that buyers will feed off of one another and drive the price up. This can happen in a lively market, even at a proper list price. The third mindset is listing at a fair market value and holding true to that price.
Buyers should ascertain what a realistic value for the property would be. Is it high, low, or just right? Then try to determine the seller’s motivation for selling, where are they going and why. The combination of the two will give you an idea of how to approach the value in your offer. With that in mind, you must then think of why do you want the property and what is it worth to you.
The ideal market value is defined by a “willing buyer and willing seller” agreeing to a price. That doesn’t always work out in a dynamic market where a buyer might be willing to pay more knowing that things are going up, but the appraiser can only make so much value based on the comparable sales for the past six months. When you construct an offer where the buyer is getting a loan always keep in mind that it must appraise or somebody has to give. The buyer can put in more money, or the seller can agree to accept the lower appraised value, but it isn’t a guarantee that you will be able to come to terms so don’t count on it being an absolute.
It is amazing how often homes sell for over the asking price these days. Whether they are priced right, or not, there are some price points in the market where the demand far exceeds the supply. People want a home and are willing to pay for it knowing that it is a long term investment, not something they will be turning over quickly barring any unforeseen circumstances that might arise. Sellers holding firm to their price solidifies the market in some ways. While frustrating to the early looker that offers low hoping to get a good deal, it is to be expected that when the other buyers out there see the property and enter the action the likelihood of getting a reduction in price is lessened, depending on where the seller is priced relative to the true market value.
None of this means that you won’t get a discount if you ask for it. We’ve seen unexpected whoppers of accepted discounted prices over the years. It depends what the seller’s situation is, which can change in an hour, what the timing of the offer is, and other details. With enough benefits sellers may surprise you with their price flexibility so don’t hold back from making an offer and letting them decide if it is acceptable or not.
Buyers and sellers watch the market online more than ever. Most are very knowledgeable about the market activity and resulting price fluctuations. Stay up with the market, make a fair offer, and always keep in mind how the property will suit your wants and needs in the long term versus getting hung up on making the deal of the year. Inventory is scarce, prices are fluctuating, worry more about terms, conditions, and being the one that can buy the property than a thousand here or there. If they won’t budge, they are proud of it. You need to decide if their pride is justified. If it is then you have the opportunity to be the proud owner of that property should you choose to set your negotiating emotions aside and make an agreement.
Pay attention, be flexible, establish your wants and needs, and you will be able to buy the right property at the right price.
When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. firstname.lastname@example.org