That is a tough question that really varies on many things. Each home is different but the average in Haverford Pa. is 5 to 7% less than the original asking price. Here are the variances that will determine the final price.
1. Condition Of The Home & Price Relative To The Competition. If a home is move in condition, meaning everything has been upgraded recently and you just have to unpack and start enjoying your home that property is going to get close to it's asking price or a little more if more than one bid is on the home. It has to be priced within it's competition though. The seller cannot say " I have a great home and put $20,000 into it so my home is worth $20,000 more than the top priced home." Your home will not appraise if a buyer agrees to a high price. The appraisers look for comparables within a mile. They have to have settled at that price. If the home does not appraise the buyer can withdraw from the transaction. So normally the seller has to reduce the price to sell it at the appraised value anyway. You also will reduce the traffic of buyers who are intimidated by the high price.
2. Time on the market. This is related to condition of the home and pricing. A move in might go the first week on the market if it is priced right. A home that has a major negative like needing the basement dug up and repoured or waterproofed or a new roof or electric might sit for quite a while without any serious offers. The seller might be trying to get top dollar regardless of the negative, feeling it is still a strong home. After living with a problem in a home, over the years it becomes less important and the owner loses sight of it's importance on the value of the home. I know we have a particular skylight that drips when the rain is blown a certain direction that I have been moving down on my list of repairs as the years go by. Each month a home sits on the market it loses more of it's buyer base. Everyone that is interested in the home has already seen it and only a major price drop will bring them back in. So that home might be reduced 2 or 3 times at $5,000 or $10,000 at a pop. A home that started at $350,000 might be down to $330,000 after six months on the market so it is already down more than 5%. Now most buyers interested in the home will offer $10 or $15k less if a home has been on for quite a while because they feel there will be no other buyers to compete with. Naturally the seller will come back with a counter unless they are under a lot of pressure to get the transaction completed.
3. Short Sales & Foreclosures. These homes typically get substantially less than their competitors because the sellers are distressed financially or the bank owns the title now and wants to get it off of their books. They usually are sold "as is" meaning they will not fix anything the inspector finds. Even the township inspection is sometimes stipulated as the buyer's responsibility. These homes may need major updating since the funds available to keep them updated were not there. Buyers typically drop down 10 to 20% off of the latest asking price. The negotiations will be long and arduous as the bank tries to get the best price for it's asset. They could drag on for months instead of a matter of days in a normal transaction.
So know going in what similar homes to the one you are purchasing are on the market for and what they actually settled for. An informed client is the strongest client to deal with. Sellers react differently to lower offers. Some accept it as a business tool and some get insulted and have a knee jerk reaction. Even the agent's preconception of the home's worth may have a bearing. We have had agents tell us not to even bother bringing in a low offer but they should have the courtesy to check with their clients first before they make that decision.
One other factor determines the offer. If the buyer is sure that is their dream home and knows they are not going to find another like it anytime soon we advise them to give the seller what they are asking. A few thousand dollars over a thirty year mortgage is not going to have a huge impact.
Century21 Alliance Jim & Deborah Brady
610-853-2700 Ext 416
www.bradyhometeam.com
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