One essential service a Real Estate Agent can offer their Clients is to engage in negotiations with the seller or buyer. In this case, we will focus on representing the buyer.
The most frequent questions I ask me while I’m representing a buyer include, “does the home include the fridge, washer/dryer, etc…,” “is the price negotiable,” “will the seller repaint?” The best answer I can offer anyone early in the home buying process is, “yes.” Yes, everything is negotiable, however… there is a market value for the home, and these values are a range, not a specific number. When the seller sat down with their Realtor, they had a variety of possible prices at which the home might sell. This price included whether the seller intended to cover the washer/dryer and how many repairs they were prepared to do. The list price, or asking price, is more an expectation from the seller of where they would like to see the contract.
So if we ignore everything except the price we come to the common misconception that all sellers overprice their homes. This misconception causes buyers to often underbid on homes, and if there is more than one offer, they can lose the house. Remember the range of values? Sellers will tend to choose a number on the right side of the valuation scale while buyers will want one on the left with a typical result of meeting somewhere in the middle, but this is not always the case. Seller’s who are interested in quickly selling the home may choose a sales price further to the left to attract more buyers, but this doesn’t change the value of the house, it is only a marketing stance. If more than one person places a bid on the home, you will be competing against the other buyers’ offers and not with the seller’s original price.
The best way to respond to a seller’s advertised price is to use it as a piece of information. This information gives you a general idea of the seller’s view of the value for the house. Do your research as to the best price before making the first offer. The best study you can do is a CMA (Comparative Market Analysis) that your Realtor should be able to perform for you. Ask if your Realtor is a certified Pricing Strategy Advisor (specially trained by the National Association of Realtors to conduct CMAs), and use their information to determine the most appropriate opening offer in the negotiation. With this information, you are best positioned to have an accepted offer at a price with which you will be happy.