Wishing Upon William Shatner’s Ninja Star

Probably the number one question that buyers and other people with keyboards ask me is this:  Is the price negotiable?

This week I had about one person-with-keyboard per day ask me this, one way or another.

A lot of these people with keyboards have phone numbers like 916-999-9999, so I know they don’t want me to call them.  But boy, they sure want to know if the price is negotiable.

It’s as if they’re sending me an email that says:  “If I like how you lie to me, I might do business with you.”

So far my lying skills are pretty pathetic.

The Short and Legalistic Answer

The short answer to the question of whether price is negotiable is this:  of course it is.

If you read the Buyer Representation Agreement — which most of us don’t use because we don’t want to scare you into sending your fake phone number to another agent — it says that the buyer agrees that the Broker “does not decide what price a Buyer should pay or Seller should accept”.

Asking price is exactly what it sounds like, it’s the price the seller is asking.  It may not be the same as selling price.

The selling price may be less.  Buyers love hearing that.

The selling price may be more.  Buyers don’t like hearing that.

Life’s Pricing Mysteries Revealed

• At any given time around here, in any given neighborhood, homes are selling for 94% to 102% of list price, on average.  Why isn’t there more of a discount in this “tough market”?  It’s because the homes are already discounted relative to what has been selling, and (in general) only the homes that are already listed at a discount are selling.
• Bank owned properties tend to be in the higher end of that range, selling closer to list price, than non bank-owned properties.  This is because they’re already offered at a better price, so there’s more competition on them.
• Are prices on short sales negotiable?  Sure, why not.  They’re fake listings anyway, which are neither short nor sales.  Once you believe the myth that you can really own one, you might as well play William Shatner on it.  My recommendation for those who are serious about owning, however, is to go look at bank foreclosures, which are real listings.  (I’ll have more about short sales in a few days). 
• At any given time around here, in any given neighborhood, homes are selling this month for 0% to 3% less than what they sold for last month.  Let’s call it 1.25%, since that’s probably a decent average.
• A home that’s discounted today for 1.25% of last month’s sold price has a good chance of selling for about that, on average.
• The home that’s listed at 20% less than last month’s sold price probably already has twenty-five offers on it.  Some buyers will say “I don’t want to get in a bidding war”, but to me that objection doesn’t always make sense.  I’d rather end up owning at 10% below market after offering 10% above asking price than negotiate 20% above market down to 10% above market just so I could feel like William Shatner.  What will feeling like William Shatner do for me, anyway?  Nichelle Nichols won’t kiss me.
• A bargain is not how much you negotiate off of list price.  A bargain is how much you paid relative to how much others paid in the same market.  The proof is that an appraiser would evaluate your home relative to other sold comparables.  List prices are irrelevant for appraisal purposes.

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