In today's real estate market there are two types of sellers that many agents and buyers will encounter. The first is the "crazy" seller. Not that he is really crazy, but his mind-set has not caught on to the reality of the home market as it is today. He thinks that prices are still increasing at a break-neck speed as in 2004 and prices his home accordingly. That is to say, way above what the market will bear. This seller often thinks his home is "special" and better than all of the other comparable homes on the market and prices it higher than all of the competition, even though his REALTOR may have strenuously advised him not to. There are many homes out there right now with high crazy prices because their sellers are not living in the real world.
The other seller is the "sane" seller. He has kept up with the news and listens to his agent. His home is priced reasonably, often just a little lower than the competition. This seller may have been a "crazy" a few months ago, but has learned that wanting a price and finding a buyer willing to pay it, are two very different things. He has "seen the light", so to speak.
Buyers, with the assistance of their agents, must identify which of these sellers they are dealing with. If you are dealing with a crazy seller who has over-priced his home considerably, it may be logical to offer much much less for the home based on what homes are actualy selling for in the same area. An offer that is $50,000 or $100,000 less than the asking price may be reasonable. The seller may not accept it, but then again he might. If he does not, you can move on to more correctly priced homes.
If you try the same thing with the sane seller who has priced his home much closer to its true market value, he could be so insulted to have such a low offer that he could refuse to negotiate anymore with you. I have seen that happen. I have received orders from sellers to never bring another offer from a buyer who made a ridiculously low offer. At the very least, the seller's attitude is going to change. And this is the seller that you have the best chance of getting a fair price from. So you do not want to insult him with a real low-ball offer. I have a seller right now that has always kept his price just below the competition and has nearly sold his home twice. Deals fell through due to bank incompetence. He is now at a very low price for his subdivision. If someone offers him a price way below his asking price, he is going to be very unhappy and insulted. He is a sane seller and is asking a very fair price for his home. It would be ill-adivsed for a buyer to mistake him for a crazy seller. They could end up losing a great opportunity.
Your agent should know what is and is not a crazy price. He or she should be able to advise you as to what a reasonable opening offer should be. You can certainly offer what you want to, but at least consider the advice of the agent that represents you.
Learn to distiguish which sellers are asking for the moon and those that are asking for a fair price for their homes. Knowing which is which will greatly help you as you work your way through the current real estate market.
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John Elwell - REALTOR
Bill Nye Realty, Inc.
Licensed in Florida