Monday, December 8, 2008

What makes a reasonable offer?

It has been said time and again, but the real estate market is nothing if not local. Everything about the world of real estate can and does vary from state to state, city to city, region to region.

Even things things that we all know as truths of real estate are actually very, very local. What percentage of the asking price makes a reasonable first offer? What ever number you say may be perfect for where you are, but not for somewhere else in the nation.

I have come to realize this as I have often worked with people relocating to the Monroe area or who are purchase weekend property here. These buyers do not understand the local real estate norms, and consequently, they have accidentally insulted some sellers.

Around our area, homes tend to sell for fairly close to asking price.

In 2008, homes in Green County for 95.75% of asking price on average, and the average selling price over the last five years has been 96.86% of asking price. Going back 10 and 20 years showed this is even slightly lower than normal; the average selling price for both ranges was 97% of asking price.

Buyers need to know this type of information when putting together an offer. Some buyers may want to offer no more than 80 or 90% of asking price due to repairs required or other reasons, and that if perfectly fine. However, I have seen some buyers who make what they consider a reasonable first offer of 80% of asking price and they puzzled by why the seller does not even respond. The buyers did not understand that their offer was a slap in the face, a low ball offer that the seller considered insulting.

Relocation is never simple. Buyers need to learn about the community they are joining. Instead of simply asking about school systems and health care, ask your Realtor about pricing norms too.

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