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Pricing the Starting Offer

street-368719_1280Pricing the Starting Offer

Making the decision to begin the negotiating process and make an offer on a property can be an emotional and logistical roller coaster for many clients. It requires the balance of art and science when deciding where to begin the starting offer price in a real estate transaction. Here are a few tips and guidelines we present in the approach of pricing the starting offer.

-How long has the property been on the market? This could give a hint to flexibility in pricing.

-Agent to agent conversations of what the status of the seller’s motivation level may be. Learning a seller has already made another purchase or moved could provide negotiating power.

-Look at neighborhood comparable properties. What is on the market currently? What has recently sold and at what price? Where does this property land in the scope of the neighborhood houses? Making sure the price suits the home and falls in line with other properties is helpful.

-Asking the buyer “what if” scenario questions to determine their desire for the property. How much do you like it? Would you be upset about not getting it? Would you like it better at a lower or high price?  These questions guide the buyer into not only setting a top number for negotiations but also set the stage for the beginning.

-Generally speaking in a ‘normal’ market a starting offer roughly 10 percent below asking is in the ‘safe zone’ to get the ball rolling in negotiations with a desired outcome of 3-7{16e476496f5f3a73cb19f20a476d08f8bca71b0bf9338242f1d2bf6ed337f382} below asking as a sale price. However, this is all dependent on days on market, other buyers and general nature of the market.

-Remember, a “Good Deal” is relative to every buyer’s perspective. Keeping open and honest communication between buyer and agent gives the negotiations the best chance for success.

In the end, the starting price of an offer is an art and science that is full of ‘science of hard fact’ and the art of balancing the soft asset desires.

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