The Pricing Game Part 2

Last week I wrote a post for sellers, the pricing game about how tricky is is to properly price a home.  If they price it too high they don’t get any offers, and no matter how low they go buyers will offer less then full price.

A couple of buyers sent me email and one left a comment looking for advice on how to play the pricing game.  It is a buyers market and in general buyers are not offering full price.  Buyers are making some pretty low offers and some of them are being rejected.  Sellers will only go so low even in a buyers market.

I tell my sellers when they don’t like the offer that they can negotiate it up and to think of it as a starting point.  The only selllers who get offers at all are those who have their property priced right, the rest of the sellers don’t even get showings.

I tell buyers to be fair but to ask for what they want.  I like to say that it doesn’t hurt to ask.  I discourage buyers from making offers on more home than they can afford.  It helps to have a little room to negotiate.  I also discourage them in most cases from offering full price.  They usually don’t have to.

When buyers are offering less than full price it should not be because they do not have enough money to buy the house it should be because they have determined that the value of the home is less than what the seller is asking.  Your Realtor can help determine the value of a home by looking at how much money sellers in the area with similar homes actually got for their homes.  The sales should be recent and near by.  Buyers can do some of their own research.  As I have mentioned before on this blog we have released two years worth of sales data to the public.

There is a link to the information under home search to the right on this blog.  It works just like the home search.  Search by neighborhood and by the type of house, number of bedrooms etc.   Looking at how much homes sold for can help buyers decide how much to offer on a similar home.

Keep in mind that sellers may not be able to accept your offer if it is too low because they may owe more on the home than you are offering.  Negotiate the best offer that you can.  Try not to get emotionally involved in the purchase.  If the seller will not come down to what you want to offer and you are not prepared to raise your offer be prepared to move on.  It may be a buyers market but sellers can and do say no.

Wabasha_bridge

10 Replies to “The Pricing Game Part 2”

  1. This part 2 is very heartening.

    It’s 2:14am as I write this because I’m a seller and it can be hard to sleep when you’re a seller. I do think I have my house priced right – have had 6 showings this weekend – but I’m just at the beginning of the process.

    I like your balanced philosophy to writing/accepting offers. It seems humane.

    Thanks for sharing your wealth of info.

  2. All very good points for both Buyers and Sellers, Teresa. And rational. One more point that might be informative. When a Buyer believes that a very low offer is still a fare offer but the Buyer’s agent doesn’t agree, the agent is legally obligated to present all offers. (at least in my state)

    kv

  3. Good point, we are legally obligated to present them all. Even when my clients go super low I present it and negotiate the offer like it is full price, it is my job.

  4. Just out of curiousity, what percentage of the list price do you consider a low/super low offer? What was the lowest percentage offer you have seen. Do you see more dillusional sellers or buyers?

  5. I can’t really answer that. If the home is over priced by 25% then I guess I wouldn’t consider 75% of list price to be low ball. Not sure what the lowest one I have seen is. Maybe $50K less than asking price.

  6. Do you submit many offers at 75% of the current list price? This seems low. Just a curiousity of what most offers are generally coming in at in this market. By the way I read your blog regularly, and although I don’t always agree, I do find it very informative & interesting!

  7. About pricing game… no joke, I contacted few local realtors and ask their professional opinion for the realistic listing price for my home. Every single one of them tries to compete for the listing and none of them provided me a firm amount. One even told me that I could list any price I want.

    1. Teresa Boardman says:

      You must have an unusual home if you can list it for as much as you want to.

      1. Hi, Teresa:

        I don’t think so. My disappointment is the unethical practice due to the competion among the realtors. Right now I listed with a one percent realty and learnt that commission is not incentive for the buyer agents to show my home to their buyers. As such, when I am ready to buy my next home. I will not consider to involve agent’s assistance that protentially will limit the houses I will be viewing.

        1. Teresa Boardman says:

          Real estate is local and it doesn’t work that way at all in Minnesota.

Comments are closed.