How Do Sellers Price Their Homes, and How Much Should You Offer?

How much under the asking price should you offer on a home? It depends on how the seller priced it. Homes in Montgomery County generally fall into one of four pricing groups, and knowing which group a home is in tells you how much room you have to negotiate and how fast you need to move.

Clients ask us this question all the time, and the answer is not simple. Here are the four basic ways sellers price their homes, and what each means for your offer.

1. Ridiculously overpriced

These sellers listened to an agent who inflated the value of their home to win the listing. Sellers tend to sign with the agent who promises the most, and some agents quote a high “value” for exactly that reason.

These homes can be 10–20% overpriced. The sellers may need a “dose of reality” over a few months before they see that their home is priced well above comparable homes in the area.

What it means for you: the longer an overpriced home sits on the market, the more likely the seller is to face reality and sell at a fair price. Patience can work in your favor here.

2. A little overpriced

Perhaps 75% of all homes for sale are priced in this range. These sellers usually fall into one of two groups:

• Those who feel their home is worth every penny of the asking price.
• Those who want to leave a little room for negotiating.

These homes can be 4–10% overpriced.

What it means for you: this is the group where a reasoned offer below the asking price is most likely to be taken seriously, especially when it is backed by comparable sales.

3. Priced at fair market value

These sellers carefully and realistically studied other homes for sale and priced their home very competitively. These homes usually sell within 4 weeks, at or very near the listed price.

In an active market, timing is everything. In the good old days, you might have had the luxury of viewing a home several times, even bringing your relatives to see it, before making an offer. Today, “he who hesitates is lost” describes buyers who dally over a decision.

What it means for you: expect little room to negotiate, and be ready to act quickly.

4. Priced below fair market value

These homes are priced below value. Perhaps the seller wants a fast sale, or perhaps their agent recommended too low a price. These homes usually sell within 7–10 days, at or above the listed price.

What it means for you: there are usually competing offers in this situation, and you may need to make your first offer your best offer.

Which group is the home you love in?

The only way to know is to look at the comparable sales. We pull the comps for you and help you decide exactly what to offer, before someone else does.

Ready to talk about an offer? Call Charles Chapman at 240-403-0400, x319, or Debbie Browne at 240-403-0400, x316, email Charlie@TheEncoreTeam.net or Debbie@EncoreTeam.net, or start with our buyer resources.

Charles Chapman, Associate Broker, and Debbie Browne, Senior Real Estate Specialist® (SRES®), The Encore Team at RE/MAX Realty Services, 15245 Shady Grove Road, Suite 100, Rockville, MD 20850.