The days of wondering how much of a discount you could get off the list price have been replaced with hoping to limit how much OVER the list price you are willing to pay. For buyers, how much to pay is relative to how well the home fits all of your needs, and how much you love it.
Here’s a gauge of how to determine how much to offer:
- For home you only like a lot, try to keep the premium-above-list to 5% or less.
- The average winner pays 6% to 7% over the asking price.
- The top-rated masterpieces are fetching 10% (or more) above list price!
Any decent property that’s fixed up and priced right should go pending in 7-10 days.
If you are a dare-devil, one strategy to consider is waiting a couple of weeks after a home is listed for sale. If it hasn’t gone pending, then the condition, price, or agent was a problem and by then, the herd has cleared out so you should have a little more negotiating power.
But if you think the new listing is a hot one, then you better get over there right away for a look.
- Ask if the listing agent has a strategy for determining the winner. Most agents will spread the offers out on the coffee table, and let the sellers pick one. If that’s the case, the terms of price, down payment, waived contingencies, and escrow time will probably be what determines the winner – with influence from #2:
- Any compliments you can bestow on the sellers and listing agent in person or with a love letter can go a long way. The love letters have come under scrutiny lately, and I totally agree that sellers and agents will discriminate consciously, or sub-consciously. Just use your first names and no photos.
- Know what you are looking at, and don’t overpay for fixers. You may see crowds, but almost all buyers will pass on the fixers. If you aren’t that familiar with spotting needed repairs and identifying costs, then work with someone who is.
- Waiving contingencies. It’s uncomfortable, but your competitors are doing it. All four of the Crater Rim buyers who were willing to pay $90,000+ over the list price waived their appraisal contingency.
- If you know you are going to buy the house regardless, make your deposit non-refundable and release it to the sellers within seven days after acceptance.
- Have your mortgage pre-approved by a well-known and respected lender who will call the listing agent to sell them on your qualifications. If there are cash offers, this is about your only hope to compete.
- The listing agent has influence on the selection, and prefers a buyer’s agent they know and trust. The buyer’s agent is smart to provide their own qualifications that demonstrate they can close a deal.
If all else is equal, the homeowners want to sell to someone who will close on time with minimal problems. Someone who makes it easy. Somebody they like. Buyers are smart to make a lasting impression on the sellers or listing agent, because in a close race, how the sellers feel about the buyers will decide it.