How much can you can negotiate on a house depends on the market as well as the house. I can tell you this though – it’s not as much as you think. It’s easy to find endless articles on the web telling you what to do. While those so called experts are advising you, they have no knowledge of your market or the type of home you’re considering.
Because real estate values are extremely local, general advice is quite limited. Whoever writes the article you’re reading doesn’t know your market and it’s housing styles.
Historical and Recent Averages
Let’s go to the New Jersey MLS for our data. Because most sales involve 2 different brokers, I’m using this as our example.
The NJMLS tells us that from 2000 through 2019, homes sold at 96.3% of the asking price. Days on the market are 74. When I began in real estate, I was always taught that the historical average for Bergen County was within 5%s of asking.
2016 is the peak of this cycle from what I can tell. The average for 2016-2019 is 97% of the asking price. The days on the market figure is shorter at 63. Looking at 2018-2019, our most recent period, we find that it’s 97.1% of asking and 59 days on the market. This is for Bergen County overall in the NJMLS.
Low Ball Offers Don’t Work
If you read any article on the web that tells you to start at 10% or more under the asking price, don’t. Based on the above, it’s obvious why this won’t work. NJMLS figures are the truth. They tell you what actually happened.
For a $500,000 house, 97% is $485,000. Put yourself in the homeowner’s shoes. How would you feel if someone sent in a $450,000 offer? You wouldn’t be thrilled. Let’s add in the fact that this is a seller’s market since there are more buyers than homes. You wouldn’t be thrilled, you’d be angry. “Why waste my time on a ridiculous offer?” is what would be going through your mind.
Imagine you’re the seller again. Your agent tells you an offer is arriving. You are excited and can’t wait to see it. Then in comes 450 on a 500 house…….. Do you think the seller will want to work with that buyer?
Imagine you’re the buyer. You have sent in your 450 offer expecting to hear a reply. The reply you get is either no reply (“We’ll negotiate when you’re ready to send in a decent offer.”) or maybe the reply will be 448 or 449. Can you imagine how you would feel? Not happy I’d bet. Frustrated and upset is what I would bet on.
Low ball offers don’t pull sellers down; they make sellers less agreeable. Bottom line – you don’t get the house you want or you end up paying more for it.
How Much Can You Negotiate On A House
How much can you negotiate on a house depends on your specific market. By the time you find a house you want, you should know what to expect. Your agent should have taught you both market dynamics and housing values.
The key to all of this is indeed information. How much you can negotiate on a house is only answered by knowledge. Do the best you can but don’t expect magic. This goes for sellers too.
Asking too high a price is a huge mistake. You will start that series of price reductions which under sells your home. Even in a seller’s market starting too high gives all advantage to the buyer.
Why? Because you miss the market. The buyer who would have paid you more can’t come because you’re over his price range. By the time you reduce to the market, your home is old news and is passed by. Now you only attract bargain hunters. Ouch!
Do Your Homework
Do your homework. Learn the values so you can tell if a house makes sense or not. Then be prepared to pay a fair price. Sellers please market your home at a price that attracts your buyers. You’ll get your home sold for what it’s worth in a reasonable amount of time.
If you need advice on the market, negotiating or anything else, just text or call me at 201-741-8490.