Oahu Home Sales

How Much Should I Offer?

We’re often asked by our clients, “How much under the listing price should we offer?”
This is an excellent question. The answer is difficult. The main reason I emphasize the education phase of looking at homes is because that is the best way for you to know value. Sellers price their homes differently for 4 basic reasons:

1. Ridiculously Overpriced!
These sellers have listened to a real estate agent over-inflate the value of their home
in an effort to obtain a listing. There is a natural tendency on the part of sellers to
list with the real estate agent who gives them the highest promise. There is a
tendency by some real estate agents to give the seller a high “value” in an effort to
obtain the listing. These homes can be 10-20% overpriced. These sellers may need a “dose of reality” for a few months before they begin to realize that their home is way overpriced as compared to others in the area. The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price.

2. A Little Overpriced!
These sellers fall into 2 categories:
• Those that feel their home are worth every penny of their asking price.
• Those that want to leave a little “negotiating” room.
These homes can be 4-10% overpriced. Perhaps 75% of all homes for sale are priced
in this range.

3. Priced At Fair Market Value
These sellers have carefully and realistically studied other homes for sale. They have
priced their homes very competitively. These homes usually sell within 4 weeks at or
very near the listed price.

4. Priced Below Fair Market Value
These homes are priced below value. Perhaps the seller wants a fast sale. Perhaps
the real estate agent recommended too low of a price. These homes usually sell
within 7-10 days, at or above the listed price. There are usually competing offers.

Bank Protection
Even by carefully studying homes for sale, it’s difficult to establish Fair Market Value.
If you’re obtaining a new home loan, you’ll be protected by the Professional Bank
Appraisal. Home lenders want to make sure that you don’t over-pay for a home. If
the home does not meet value in the eyes of the bank appraiser, you’ll be informed.

This entry was posted on Thursday, September 27th, 2007 at 10:57 pm and is filed under For Buyers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.