If You Wonder What to Offer......

October 30, 2012
It was once the case, not too long ago, that potential purchasers would ask their agent "How much under the listed price can I offer?" In today's market of low inventory and multiple potential purchasers, the question becomes "How much over the list price should I offer?" In both instances, the agent's best response is to print out the data on the most recent sales of similar properties and let the numbers guide an offering decision.
This morning I received my monthly copy of "Housing Trends Update". I found the chart of Average Sales to Listing Price Ratio for residential real estate to be informative on the subject of what a purchaser might want to offer. The chart cites ratio in a number of states across the country. California, Arizona and Nevada had the highest ratio. The data is divided by the following categories:
Bank Owned Distressed, Damaged:    98% list to sold price
Bank owned move-in ready:               101% list to sold
Shirt Sale:                                            98% list to sold
Non-Distressed (Standard)                  97% list to sold
This data indicates that at the time a property receives an acceptable offer, the price is not very negotiable. Recognizing that the price at the time of the acceptable offer may have been reduced, it does show that buyers (and appraisers) are feeling that the list price represent market value.
If you are wanting to purchase in today's real estatae market, be prepared to bid over not under.