Do things like how long the home has been on the market and the economy affect how much a homeowner is willing to drop?
How long a home has been on the market?
If a home seller has had a difficult time selling, does this mean that they will accept lower offers? In general, our buyers agent’s study of about 10,000 home sales in the Boulder and Northern Denver shows that most home sellers will hold out to get 2-5% of their asking price, regardless of how long their home has been on the market.
That said, the data does show that even though most sellers will wait to get within that range, more sellers appear to accept offers less than 5% if their home has been on the market longer. To be more specific, about 80-85% of home sellers sell their homes within that magic range of 2-5%. But, if a home has been on the market for 6 months or more, about 75% of these sellers sell for within the 5% range. Most of the sellers that sold for less than 5% accepted offers within 10%.
So, it seems to be more likely to negotiate below the 5% mark if the home has been on the market for longer than 6 months. Still, the vast majority of homes on the market for long periods of time sell for within the 5% range. Even if the seller has had a difficult time selling, it is rare to negotiate below 10%.
A strong market versus a weak market?
Most homes sell within the 2-5% range, whether the market is strong or weak. This may be somewhat counter-intuitive at first.
One exclusive buyers’ agent that is a member of our association compared home sale data during a hot market (1998-2001), a flat market (2004-2007), and a weak market (2008-2010).
The data shows that in all 3 markets, 80-90% of homes sold within 5% of their asking price. It is important to remember that asking prices are set based on current market conditions. So, if the economy is booming, the home’s current value is more than in a weaker market.
While most homes still follow the same pattern, there are some important differences worth noting. In a booming market, more homes were sold for at or more than their asking price than in a weak market. Also, in a weak market, more buyers are able to negotiate an additional 2% off asking price than in a hot market.