That’s not new though. Buyer’s market, seller’s market, blah blah blah. What does it mean really? Homes are always overpriced. Always have been.
Most homes are overpriced. Through good and bad, sellers usually overprice their homes. The average active list price for a single family home in Denver for 2006 was 20% higher than the average list price of the homes that sell. That’s why in a typical month between 5% and 10% of all listings on the market expire without selling.
Sellers need time to soften up. Most sellers don’t let their home go for much less than the asking price in Denver. A typical Denver home sells for 2% less than the list price.
In Denver, there is usually less than 1% in concessions. It takes a seller months until they’ll consider accepting a lower offer. Most times, the seller knows that, instead of accepting your offer 10% below his list price, he should turn it down and market the home at a lower price. Perhaps just 5% lower than where he’s at will get him action. After all, he already knows his house was better than the rest you looked at; that’s why you wrote an offer. All he needs to do then is figure out what homes you looked at and price his home to compete.
Buying a home? When you write an offer, you send the message to the homeowner their home was the best of what you looked at. It tells the seller that he is now close enough with his list price that he has created interest. At that point, he knows he’s close- why should he accept 10% lower than his asking price? To a buyer, days on market without a price change is usually the strongest indicator of just how much lower they’ll go. If they dropped the price yesterday they probably want to see that price change work for them more. If they haven’t changed the price in 6 months they might be more willing to deal…or they just might be stubborn.
Statistics don’t constitute a rule, just a guide of what’s typical. The “buyer’s market” that we’re in doesn’t automatically change the mentality that drives pricing for sellers. It just means there is less competition for homes, so prices may ebb down some or you might eke out a few more concessions. “Some” isn’t 10% in the course of a couple months. There are lots of reasons why you might see some price decline in a neighborhood. In the end, though, it always comes down to supply and demand. There’s a lot of reasons why sellers won’t sell their homes for less than their list price. Often they can’t; sometimes if they don’t get as much as they want, they won’t be able to get their next place. There are even more reasons why they won’t or can’t sell for less than they owe. Not everyone in this position ends up in foreclosure…they just don’t sell. Only the sellers that can afford to or have to drop their price will. Even then, there is no real motivation to accept an offer drastically lower.
Remember, homes usually sell for what they’re worth. Just because you think you’re getting a deal, doesn’t mean you really are. Do your homework before you write.
Other similar articles:
- How to sell your home quickly for top dollar – Dec 22, 2006
- Buying a home? Think before making your first offer. – Dec 19, 2006
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