Negotiating Off the List Price | Ask the Real Estate Agent
In today’s Ask the Agent segment, I’m going to focus on a question I’ve been getting from buyers lately about how much they might be able to expect to negotiate off from the list price on a home.
Since we are still knee-deep in a seller’s market, this question is as pertinent as ever because the prices are high and so is the competition. But it is important to note that there are still several crafty ways of knocking down the closing price and still come out on top against competing bidders.
When I say that it’s a seller’s market, what I mean is that – in the DC metropolitan area, at least – there are typically just 2 to 3 months of inventory on the market. That means homes are flying off the shelves and are also typically going for above the asking price. By comparison, a neutral market would be between 3 to 6 months of inventory, whereas a buyer’s market means there is greater than 6 months of inventory on market.
We’re definitely in the 2 to 3 month range in most areas, and even less in some especially sought after areas. So generally it is a seller’s market now in 2018. However, ultimately this is relative and the market varies in accordance with what you are looking for. Certain areas for instance will have less inventory, others will have more. The type of home, too, is a whole other matter in itself. Condos for instance are priced different from houses and townhouses depending on the demand in the area.
The other main thing that has effect on the sale price is whether or not the home is priced right. Lot of agents and homeowners will knowingly overprice a home with the hope that they’ll hit a jackpot. But those overpriced properties will often sit, even in a seller’s market!
In a tight market, if you’ve seen a home that’s been on the market for over 30 days or even as little as 15 days, there’s going to be some room to negotiate down the price. Sometimes 3% or 4% – maybe even a little bit more. It ultimately depends on how anxious or motivated the seller is. If the home’s been on the market for less than two weeks in our area, we’re typically not seeing the price budge much. If it gets past that first week but not the second week, it’s possible to negotiate down the price a percentage point or two.
It all depends on how long it’s been on the market. The longer a home stays on market, the further the power advantage shifts from the seller to the buyer.
Particulars Are Key
There are a myriad of particulars which will affect a home’s sale price. Some of the major factors include:
- Type and age of house
- Demand to live in the neighborhood
- Duration on market
- Was it priced right?
- New Construction incentives
Often with newly constructed homes, the seller or their agent will negotiate down even if it’s not readily apparent by the closed list prices and the tax records. They may offer you closing cost credit, extra upgrades, a stipend for condo fees, and other things that are hidden from the actual sales price in the tax record.
Our New Construction Team specializes in helping buyers negotiate the best deals in new construction developments.
Contingencies, Contingencies, Contingencies
The other factor that will affect the amount you’re able to negotiate off the price is the type of contingencies that you include in the contract, how strong you are financially, how well you are represented by your agent, your chosen mean so purchasing the home, as well as the closing time.
I have spoken in depth before on how to make full use of these contingencies in your negotiations. You can check those out below:
- The Four C’s of Real Estate Prices
- So You Went Under Contract… Is It a Done Deal?
- How to Win in a Bidding War in a Hot Market
- 5 Tips for Home Buyers in a Seller’s Market
If you have any more questions, we’d love to help you out. Please send us your questions, and we may feature it on the next Ask the Agent segment!
Free Home Buyer Seminar – Mondays at 6pm!
Learn additional home buying tricks and FAQs and meet top Realtors who specialize in finding you the best house for the best price.
What’s more – just by attending you can save upwards of $1,500 off the list price – courtesy of us! RSVP in the link below.