For generations, the process of buying and selling a home never really changed. A homeowner would try to estimate the market value of their house, then tack on a little extra to give themselves some negotiating room. That figure would become the listing price.
Buyers would then try to determine how much less than the full price they could offer and still get the home. As a result, the listing price was generally the ceiling of the negotiation. The final sales price would almost always be less than the list price. It was unthinkable to pay more than what the seller was asking.
Today is Different
The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars on many homes. Because of this, homes today often sell for more than the list price. In some cases, they sell for a lot more.
For every home for sale, there is an average of 5.1 buyers, according to the National Association of REALTORS®. What’s more, half of homes are being sold above list price.
Buyers Need to Change the Way they Look at the List Price
Buyers who head into the housing market believing they should get a home for less than the list price may be very disappointed. Instead, they should be aware that in most markets, asking prices have become more like the minimum bid of an auction and be ready to start bidding.
Due to the low supply of houses for sale, many homes are now being offered in an auction-like atmosphere in which the highest bidder wins the home.
In actual auctions, sellers often set a reserve price, which is the minimum amount a seller will accept. In today’s sellers market, the list price of a home for sale may be more like that reserve price. The asking price has become the starting point of the negotiation in many home sales today.
About 40% of potential buyers who were searching for a home this spring say they haven’t bought yet because they keep getting outbid, according to a survey from the National Association of Home Builders.
Today, the asking price is often the floor of the negotiations rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you:
- Secure a pre-approval letter before starting your search
- Know your budget and what you can afford
- Work with an experienced Realtor who is active in the marketplace and familiar with which areas are seeing homes homes sell above list price, how much they are selling above list, and what terms to include to win in multiple offer situations.
In today’s market sellers have tremendous leverage when negotiating with buyers.
In negotiations, leverage is the power that one side may have to influence the other side while moving closer to their negotiating position. A party’s leverage is based on its ability to award benefits or eliminate costs on the other side.
In today’s market, a buyer wants three things:
- To buy a home
- To buy now before prices continue to appreciate
- To buy now and take advantage of historically low mortgage rates while they last
These three buyer needs give the seller tremendous leverage when selling their house. Most realize this leverage enables the seller to sell at a good price. However, there may be another need the seller has that can be satisfied by using this leverage.
As mentioned, buyers have compelling reasons to purchase a home now, and many homeowners have challenges to address if they want to sell. Perhaps they can make a deal to satisfy each party’s needs. But how?
The seller may decide to sell their home to the buyer at today’s price, which will enable the purchaser to take advantage of current mortgage rates. In return, the buyer might lease the house back to the seller for a pre-determined length of time while the seller’s work to find the right replacement property, or while their new home is being built. A true win-win negotiation.
The real estate market is hot as the window to buy while mortgage interest rates are low and prices are reasonable is closing fast! To win in this competitive environment, buyers need to be willing to waive contingencies and often to stretch their budgets to the absolute max.
If you, or someone you know is considering Buying a Home in Columbus and Central Ohio please give us a call to discuss how we can help you get the home you want without paying too much over today’s real market value.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickerington 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235
For more information about the Central Ohio housing market, visit https://blog.jasonopland.com/category/market-reports/.