People who are selling their homes need be cognizant of the questions that buyers ask when viewing homes.
The first question on every buyer's mind is invariably: How Long Has That House Been on the Market? A close second and closely linked with the first question is the ever present query: Will the Sellers Come Down on the Price?
Other variations of this question include:
- For how much do you think we can buy this house?
- What would the seller's accept for their home?
- Is there negotiating room on this one?
- What should our initial offer be?
- How low should we go?
Knowing that potential buyers will ask these questions and submit low-ball offers, many Northern Virginia homeowners wishing to sell their homes continue to price their homes at above the price that the market will bear, hoping to provide themselves some negotiating space or wiggle room. Read why this strategy for selling your home may not be your best option: "We can always reduce the price later" -- Price Reductions are NOT A GOOD MARKETING PLAN for Northern Virginia Homes.
Both buyers and sellers in Northern Virginia need to be aware of an important statistic regarding the real estate market, namely the ratio of sales price to asking price. This telling number provides solid proof that sellers are coming down on price and buyers and their agents are negotiating lower prices on listed properties.
How much? It varies by location. Take a look at this chart showing the statistics for home sales in January 2008:
In these areas of Northern Virginia, we're seeing sales prices ranging from 80.93% of the listing price (in Manassas City) up to 93.6% (in Arlington) and 94.51% (in Falls Church). Considering that the average listing price in Arlington was just a hair under $600,000, this amounts to approximately a $38,000 final price reduction.
Another consideration: These numbers DO NOT even include seller subsidies which further reduce the seller's net proceeds, nor do they take into account prior price reductions already inherent in the listing price. Thus, all signs indicate that the actual negotiating room for Northern Virginia buyers is substantially greater.
Within counties and cities, these numbers can further vary. If you are planning to buy or sell, ask your Northern Virginia REALTOR for the statistics in your area of interest.
As an example, here's a breakdown of the January 2008 numbers in the various zip codes in the City of Alexandria:
22301 (Del Ray / Rosemont): 93.13%
22302 (Braddock Heights): 95.72%
22304 (Landmark / Cameron Station): 92.57%
22305 (Beverly Hills / Warwick): 82.93%
22311 (Stonegate): 94.56%
22314 (Old Town Alexandria): 92.04%
Whether you are buying or selling in Northern Virginia, these days, more than ever, Choosing a Good Negotiator for Your Real Estate Deal is essential.
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Buyers are asking the same questions in our area. It is very difficult for sellers right now, they have to price the house to sell to get showings and still be willing to negotiate.
The biggest argument for not listing high is the fact that fewer agents will see the listing in the MLS and fewer buyer see it on IDX.
Also, the lower the list price, the higher the buying pool.
This is so easy. Why doesn't everyone see it?????????
If we keep getting this very important message out, maybe the Sellers will have a chance at actually selling their homes. It's like changing the mindset one seller at a time. I'm starting to see progress, but it is slow.
It is the same here also. Is the % of list price to sales price from the initial list price or from the price it is listed at initially? In our area it is only the well priced properties that are selling and the List price to sales price ration remains similar to your area but most sellers are playing the reduce the price game and in most cases hurting the opportunity to sell quickly and at the ultimate final price.
We see that here in Virginia Beach but not as bad. In fact the prices on the homes actually went up a bit here. Strange indeed.
Brian,
Very interesting stats and graph. I always let sellers know that if those houses that are overpriced at the start, not only have less buyers looking at them, but also end up netting less in the end than if they had of been priced right at the start.
Jo
Brian,
Two thoughts...I wouldn't give a definitive answer to any of the questions you posed...and furthermore, your question, "Will the Sellers Come Down on the Price? "...Is the Pope Catholic??? Thanks, Fran
P.S. I agree with Lenn...I'd rather have a home priced low with an agent working to get me my price...than an agent who recommends the old fashioned and outworn game of "price high, then come down"!
The problem is - you have sellers assuming Buyers will low-ball them and insist on pricing too high to start!
If they would just price right to start - buyers would buy early and everyone would be happier!
Sorry been missing in action here. Once again you just never stop ... great stuff. Hope all is well with you, yours and business. We're gonna miss you at the convention!
In Northern Delaware
200k and below is good
300k is slow and
400k+ is dead! Down about 15%
Its a great time to move up in our area.
Understanding the motives of the other party is key in educating your clients.
Now Brian I really like that chart and your way of thinking. Seems that the fact the an area is at an average selling price of (whatever) percent give a buyer a reasonable target price. I am going to see about these stats in our area.
Your Friend in Charlottesville
PAM: Thanks for your comments. I think that buyers everywhere are asking these questions. Pricing the home right is an important task, and one that we as Realtors need to assist our clients in doing correctly.
LENN: I agree. People search for homes by price ranges. If you price your home at $505,000, it may as well be priced at $531,000 because none of the $450K-$500K buyers will even see it.
CHELLE: Thanks for your comments and agreeing that this message is an important one.
TERRY: The statistic that I used here indicates the sales price as a percentage of the final listed price. It does not take into account what the original listed price was and many of these sales already had price reductions.
DENISE: Thanks for your comment.
JO: Sounds like you and I give the same advice. Thanks for commenting.
FRAN: Agreed and agreed. Thanks for your comments.
JAMES: Yes, you get it.
DESIREE: Thanks for your comments and compliments. I'll miss being at the RE/MAX Convention but am sure I'll see you again in the near future.
LARRY: Thanks for your comment. We don't even have that much in those lower price ranges in our area.
ROSS: Very true. Thanks for commenting.
CHARLES: Thanks for your comments. I believe that this type of information is very important for helping buyers and sellers make their decisions on listing price and offering price.
Totally agree to list at what it's worth. and I LOVE your graph...how did you put the arrows on there?
Yes I agree with Denise, we dont have as bad of a problem in Hampton Roads. Sellers just need to have some equity to contribute a little to all closing cost and they usually will have a deal.
Will they come down on their price? Only if they want to sell the thing!
Brian- I'm asked these same questions as well but I haven't created the visuals that you use to show them the numbers. You've inspired me to find these answers!
KRISTA: Thanks for your comment. I'll send you an e-mail about the graphs.
DEE DEE: Thanks for your comment. I appreciate you reading and adding your 2 cents.
PATRICIA: Your comment is true and directly to the point! Thanks.
CHUCK: I'm happy to be an inspiration.