I hear this all the time.
I SAY this all the time.
“That house is overpriced by $X! They’re crazy if they think they can get that amount for their house! Well, I never!”
But does it really matter? Not to you as a buyer. If a seller wants to go ahead and put a silly or inflated number on their house – that’s their prerogative. You certainly shouldn’t take insult to it or let it stop you in your tracks. Why not? Because it’s still YOUR market – a buyer’s market.
The proof is in the pudding.
Let’s take a look at all the houses sold Downtown since January in the $1,000,000-$2,000,000 price range. In the columns below I have:
- Asking Price – in many cases, this was not the original asking price, but rather the price it had come to when they finally received an offer. For example, 111 Rutledge Ave was originally priced at $1,925,000 in 2008. Now you might chortle at that and claim “values have dropped almost 50%!” They haven’t dropped that much. Remember, there can be a big difference between a home’s actual worth and what the asking price is. Had the owner priced it at $1,450,000 in 2008, he probably would have sold it sooner than 2011, for a higher price.
- Sold Price – obviously, this is the price the home sold for.
- Difference – the difference between the final asking price and the final sales price.
So what is most interesting about this list? That the average reduction by a seller on homes Downtown in this price range is $186,411. Nice.
So does this mean you’ll always get this type of discount? No, it doesn’t. There are countless factors in play including: seller motivation, short sale potential, real value, time on the market, etc… But there are also a million and one ways to get you the price you want.
Thus the conclusion is this. If you love a home that is on the market for $1,300,000 and you want to pay $1,100,000 because that is closer to its true value, do not assume that the seller won’t go for it. Don’t laugh at the asking price.
Numbers matter. A piece of paper matters. A real offer matters. And you never know how a seller is going to react until their VERY-BIG-CHOICE is staring them in the face.
Here in South Carolina, we call it an “Agreement to Buy and Sell Real Estate”.