The one who lives by the guiding principle that you should never pay the asking price for anything. That “everything’s negotiable” and the seller will always accept less … eventually.
While this trait might be useful in a car dealership or jewelry store, in the real estate market it can sometimes be counterproductive and actually cost you money – a lot of money.
Here’s what I mean. In just about every other marketplace, the asking price, or sales price, is either the beginning or the end of negotiations. You go to the mall, you see something you like, you pay the sticker price, its yours. There is no negotiating. For people selling on Craigslist, the asking price is just the beginning of negotiations. You might get it for less, if no one else offers more.
In real estate however, the listed price is essentially meaningless. All that matters is the market value.
If the home is listed over market value, there will likely be no offers until the price comes down, so there is room for negotiation. But if the home is priced at or below market value, there will be multiple offers (at full price), and the seller will not agree to less in almost every circumstance.
The problem is that far too many homebuyers – and investors – get hung up on the listing price. Even if the home is listed below market value, they still want to come in low with their offer, believing that the listed price is the start of negotiations. Instead, it’s the end. The offer is rejected outright, and the home is sold to someone else.
If you buy a home that is listed below market value, you make money, you gain equity right away, even if you pay more than asking price. By ignoring the market value and focusing on the listing price, putting in a low-ball offer, you just cost yourself money. Worse, if you insist on only offering less than the listing price, the only homes you might be able to get will be homes that are listed over market value. In other words, you might be able to get sellers that are over-pricing their home to come down closer to market value, but you’ll hardly ever get one for well below.
So when buying a house, always remember: It’s doesn’t matter what its listed for, only what its worth.
And if you want to know what your home is worth, click here.