NOTE TO SELLERS! Homes that sell in 30 days or less get a significantly higher % of list price!
This week I received a great question. Michael M. asked, “Is it wise to see a home that only recently came on the market (let’s say less than 30 days) and is $25-50K out of your price range? Or should you wait until there is a price reduction that brings it closer to your comfort range?”
A few non-scientific real estate statistics will help me answer this question. The statistics shown in the table are based on condo and townhouse listed sales for all of 2009 in the 4 locations (2 city and 2 suburban). On average homes than sold in 30 days or less sold for 96.7% of list price.
So if your maximum price is $250K, you’re probably wasting your time looking at homes priced $275K to $300K since $250K as a percent of those list prices will well below 96.7%. The chances that sellers would accept an offer of $250K are very low. However, after the home has been on market 30 days, you chances of getting an offer of $250K accepted are much better since the average percent of sale price to list price drops to 92.7%!
If your maximum price is $500K, it isn’t outside of the realm of possibility that a seller with a home priced at $525K might accept an offer of $500K since it would be 95.2% of list price. That’s less than my un-scientific average of 96.7%, but not impossible.
Of course, these are rules-of-thumb. For each home, it depends on how well it is priced, how motivated the seller is, how well your buyer agent can help you negotiate a lower price, and other factors.
Besides list price, the other consideration is your amount of self-control. Finding the right home is often based on a bonding experience that buyers have when they see a home. It often happens within just a few minutes. Some people will fall in love with a home and blow through their maximum price. (Love often knows no bounds!) Others have more self-control and are willing to risk losing a home to another buyer while they wait for the price to fall in their range.
Great question, Michael! Let me know, if I didn’t fully answer it!
ABOUT THE AUTHOR
Fran Bailey shows, previews and tracks downtown Chicago homes for sale giving her the insights needed to help her clients negotiate the best price and terms. Fran has been quoted in numerous Chicago and national publications. To schedule showings of listings regardless of broker or to contact Fran email her at fran.bailey@bairdwarner.com or call 773.793.4516. Learn More
Fran Bailey, Realtor
{ 3 comments… read them below or add one }
Are you kidding me, your answer nailed it! Thank you so much. Between the “non-scientific” stats and the “For each home, it depends…” clause, I believe you covered all the bases. Follow up question, if I may: the realty site where I saw the house says it has hit the 30 day mark, however Trulia says 95 days. What could be going on and how does this impact your answer?
My guess as to what’s going on is that the listing agent is playing games by canceling the listing and putting it right back on market. This resets the listing’s status to “new” when it isn’t new at all and resets the market time. Listing agents also do this because the listing will once again show up in the buyer agents’ search results due to the “new” status. Personally, I don’t think this should be allowed.
It’s quite possible that the system for the realty site where you saw it only picks up the market time for the “current” listing while Trulia’s system may be showing the total market time for that address. I would base any decisions on the total market time since that’s how long the sellers have truly been trying to sell the home. If you want to send me the address or MLS#, I would be happy to check on the true market time for you, Michael.
People often limit themselves too much and miss that great house because it was listed just beyond their “set parameters”. So, I always include properties that are a little higher because shopping for a home is comparison shopping and you (home buyer) can’t see a great value without a little education.
I love it when a client looks at me and says in a hushed tone… is this one really less than that the last one?