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Market Conditions in Rock County : Real Estate Advice

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Sun Jan 16, 2011
Don Tepper answered:

Maybe you should offer more. Maybe less.

What you're looking at are averages. But when it comes down to specific homes, that's different. Maybe the home you're considering really is worth every penny of $159,000. Or maybe it's worth $135,000. Or just maybe it's worth $129,000, and an offer of $135,000 would mean you were overpaying. The bottom line is: You need to know the value of the specific house you're making an offer on. A Realtor can run a CMA and give you a very good idea of precisely what the home is worth. The Realtor can also suggest some negotiating strategies for you.

On top of that, you have to be careful of the sorts of statistics you're referring to. For example, even at the macro level, you need to know whether "15% less than the listing price" means the INITIAL listing price, or the listing price AT TIME OF CONTRACT. For example, Maybe the house you're looking at started off at $175,000. Would the 15% refer to 85% of $175,000? Or suppose the $159,000 amount is its initial listing price, but the sellers drop the price to $145,000. Would that 15% drop be off of $159,000 or $145,000.

And on top of all that, those averages don't take into account so-called "seller concessions." Those often occur when the buyers ask the sellers to pay part of their closing costs, and might be around 3% of the purchase price. So even though, in your example, the sales price might show as $135,000, the real net to the seller would be 3% less. Essentially, 3% lower than the apparent sales price.

So, you can't really take a figure like that and apply it to a specific house and a specific purchase. Again, a Realtor can tell you what the house is worth and advise you on how to make the best offer.

Hope that helps.
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