The Right Home for the Right Price - Virginia Beach Neighborhoods

Do you assume that at home’s listed price is negotiable? Of course you do! But how negotiable? Will a seller accept an offer $20,000 below asking price? How about $30,000? Here’s the answer…

Sometimes!

Since every house is different and every neighborhood is different, every deal will be different. Here are some stories that will help you understand how a deal can progress. Names have been changed to protect the innocent.

First a happy story. Eugene and Gertrude wanted to sell their home in a neighborhood where similar houses were listed for $350,000 and up. Unbeknownst to them, the sale prices of similar homes were around $330,000. List prices are easily found online. It takes more effort to find the sale prices and the city tax records often lag by months. I convinced them that the market value of their home was about $330,000 and that we should list it at market value. They agreed. Within three or four days we received several offers.

The first offer was for $290,000. To make a long story short, the buyers came all the way up and above the asking price of $229,000. This just goes to show that if a home is priced right, the asking price can be a very fair deal for both sides.

Could they have gotten more if they had asked for more? In this case the answer is no. The appraisal came back at $331,000 and the contract purchase price was $333,000. The sellers had to adjust the contract price down to meet the appraisal.

Here’s another story…

John and Jane lived in a very nice neighborhood of $350,000 to $400,000 homes. However, they associated their home more closely with the neighborhood next door that contained $425,000 homes. With that in mind, they were fairly confident that their home would sell for around $425,000. Just to be safe, they got an appraisal and were fairly shocked when it came back at $365,000.

Their agent recommended listing the home at $400,000 and informed them that the market value was around $380,000. “Be prepared for it to sell at $375,000” he said. This did not match up with the seller’s world view, so they listed the home at $420,000. And no one came. The price was dropped to $415,000. Still no one came. $400,000.  Still, no one put in an offer.

This scenario is still playing out and one of two things will likely happen. The sellers will continue to drop the price and the home will sell for around $380,000 or they will rent it out.

(update… it sold for $380,000)

The decision to sell at a price much lower than originally planned takes many months and many price drops. When they first put the home on the market, they would not have considered a $370,000 offer. Today they would.

Sellers are usually willing to consider an offer within about 5% of the list price. Can you buy a $500,000 home for $400,000? If you were to buy it for $400,000 it would no longer be a $500,000 home. It would be a $400,000 home.

Let’s phrase it a different way. Can you buy a home listed for $500,000 for $400,000? The answer is “yes.” But you will usually have to wait until the seller drops the price to about $420,000.

The lesson to take away is that the market sets the sale price, not the seller. A home is only worth what a buyer will pay for it. The perfect home in the perfect neighborhood is only perfect if the price seems fair. The good news is that there are many homes to choose from so if you are looking for the perfect place, there is no time like the present!