Question: I’ve made a few offers on homes and am frustrated by the lack of negotiating I’m able to do. Are there things I can look for that are a sign that there’s room to negotiate price and terms?
Answer: Most Buyers think that negotiating the terms of a home purchase is between them and the home owners, but in reality, most of the time you’re actually negotiating against other buyers. This is especially true when a home has been on the market for 30 days or less. You can make a perfect case for why a home is worth less than the owner is asking, but if there are other buyers willing to pay more and offer better supporting terms, you don’t even get a participation trophy. If you’re dead-set on negotiating the price and maintaining favorable contingencies, the best thing to look at is the number of days a home has been on the market.
Historical data supports the following:
If you want to purchase a home that has been on market for 10 days or less, you should be prepared to pay at or above the asking price
There is very little room to negotiate price in the first 30 days
Buyers gain negotiation leverage after a home has been listed for 30 days and it gets better each month after that
The last three months of closed sales in Arlington shows the following:
Buyers who purchased a home within 10 days of it being listed for sale negotiated 1% or more off the asking price on just 7.9% of transactions
Buyers who purchased a home within 10 days of it being listed for sale paid 5% or more over the asking price on 18.7% of transactions
Use this data to make buying more strategic and less guesswork/frustration, but remember there is no hard rule that you can’t negotiate a price and terms from Day 1 or that a Seller is going to agree to discount their price after three months. Remember that each transaction is unique in that both parties have their own set of priorities/circumstances, each house comes with its own unique strengths and flaws, and all it takes is one or two Buyers being on vacation/busy for a deal to go from multiple escalating offers to one negotiable contract. Take some time to understand underlying market trends and probabilities and apply those to each individual transaction based on the information that is unique to it.
If you’d like to meet to discuss how data can be used to develop your purchase strategy, you can email me at Eli@EliResidential.com to schedule a time to meet.