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List Price vs. Offer Price

It is probably the most frequent question I hear from people searching the MLS – “When I am looking at listings, how much can I take “off the top” of a list price?”

Unfortunately, I can’t answer that question with any real certainty. Every seller has a different situation, and each property has been priced independently. I can, however, make some points that may help your understanding of this process.

* The Sarasota Board of Realtors has reported that the average sale is about 95% of the list price, a fact that surprises most people. The common perception is that most properties are being “low-balled”.  Actually, after several years of a very tough market, list prices are fair, and have little to no margin built in.

* Bank REOs are a bit easier to estimate.  Generally if you stay within 10% off their list price, you will get a response to your offer.  Interesting point – if they drop the price, which they do on a systematic basis until the property is sold, you will always want to stay within 10% of list. So your target price might not fly this week, but might be viable next week. That is, if the property is still there. Many REOs are priced so significantly below market that the have multiple offers, and quickly.

* When dealing with a short sale, the list price is suspect unless the listing indicates “bank approved”. The bank often had no input into setting the list price, and we don’t know what they will take until we make an offer and await the response.

* People ARE buying. The fact most keeping people from getting a great deal is the thought that no one is buying so all they need do is throw out any offer and it will be accepted.

The answer is to first look at market value. If the home is priced over market value, we have room to negotiate. If it is already priced under current market value, we may counsel you to pay list price. I know, it goes against every instinct in this market – but I promise you, if the home is priced well below market and is a desirable property, you will be competing for it.

So, the point is that every situation is different, and we will look at market /assessed value, seller equity, seller situation, and recent comps – then figure out a good price for the property. One thing I can guarantee – we will never let you pay more for a home than it is worth in today’s market.