If you've turned on a TV or read a newspaper in the last year then you have likely heard talk that we are in the midst of a buyer's market in the real estate world. A buyer's market would lead you to believe that buyers are in control and are able to negotiate fantastic deals on their purchases. You may also be led to believe that sellers are desperate and that they will welcome all offers. While these things may be true in parts of the country, they certainly ARE NOT true here in the Olympia area! Unless you plan on purchasing a property that needs some good old sweat equity (in other words it is UGLY), you should plan on likely paying within 10% of the asking price.
Depending on what price range you are looking at, you may actually find yourself in the middle of a bidding war. In fact, the last 10 offers I have written with my buyer clients have been situations where there were competing offers on the house. Now logic will tell you that if you want to get a screaming deal on your house, competing with other offers is not ideal!
So, in what price ranges are you most likely to get a big discount from the asking price and in what price ranges are you likely to find yourself competing? The following chart will shed some light on that...
In this chart the green bars represent demand, or the percentage of total sales that fall in each price range. The purple represents supply, or the percent of active listings in each price range. You can see here that the price range where demand is higher than supply is everything under $300,000, and most dramatically in the $200,000-$250,000 range. This is the price range where you can expect to pay closest to the asking price (on average) and you are most likely to find yourself in competition with other offers. However, once you get above $300,000 the tables begin to turn. There is far more supply than there is demand. This means that sellers in this price range are going to be more likely to entertain a low offer and you may get a bigger discount on your purchase.
The most important thing for home buyers is to get connected with a real estate professional who is knowledgeable about local market trends, able to show you a detailed market analysis, easy to communicate with, and skilled in negotiating on the behalf of buyers. Finding the right agent will make your home buying experience far less stressful and should also save you money!
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Michael: Those are good stats. Thanks! I've also heard at the low-to-medium end about multiple offers. I always thought a buyer's market was determined by how many months of inventory was on the market. If that's the case, it still may be although it's shifting a bit.
Hi Paul, yes months of inventory is a great benchmark for what type of market we are in. However, I've always found that alone to be a bit misleading. To counter that problem, I created this chart to show how the climate is vastly different depending on your price range. I'm glad you found this info interesting, thanks for commenting!