I am working with a client buying a home between $400,000 and $500,000 in the Gahanna/Blacklick area. When we started he was hyped about getting a great deal. Which is a reasonable expectation in this buyers market. He was defining it by how much off the list price he could buy it for. He ended up with a great deal but only $9,000 off the list. It was a great deal because the list price was great. He would have been willing to pay list because it was far and away a better priced home compared to the other homes we viewed. Even at the list price no other home was even a consideration. What price do you offer when the home is already priced very well? The frist step is learn as much information about the transaction as you can. Here is what I learned;
- It had been listed as high as $524,000
- The seller paid $450,000 for it 4 years ago
- They have mortgages of over $500,000
- It was listed a month ago at $449,000 and now listed at $439,000
- They had three offers on it that haven’t worked out.
- The seller isn’t distressed. It isn’t a short sale
My advice was as follows:
If you come in with a price in the $420’s you increase your chances of a counter from the seller and likely the counter will be closer the mid $430’s or higher. They may view the offer as low and want to work it but not drop down to their number.
If you come in closer to list you will certainly get the home but increase your chances of leaving money on the table and paying more then you needed to, even if priced well. Keep in mind there were no other offers on the table or interested parties.
So we made an offer of $430,000 and the seller ended up taking it without countering. Did we offer too much? Since the seller accepted it the first time maybe we should have offered something lower. Good question but they would have increased the risk of a counter. Now they made an offer that was a stretch for the seller but not too far of a stretch. It is also hard to second guess your actions. It is often not productive.
Remember, negotiating is sometimes more art then science. It is the concept of exerting pressure on the other party. And don’t judge how good of a deal you get by how far off the list price you pay. In this case the good deal is defined as buying a home that in the previous market would have been out of his price range. and it is a good deal because it is priced much better then the other options on the market.