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May 17th, 2012 11:27 AM by David W. Welch
"How low can I offer?" I hear this question all the time from buyers, and I pretty much have the same repsonse every time. "It depends." What may appear to be a lowball offer is actually a fair market value for the property. That does not mean the seller is going to view it that way. This difference of opinion about the value of a property is why so many homes do not sell. When the seller's price is in line with the market's opinion of value, the property will likely sell and close to the asking price.
If you don't believe me, consider this. I looked at sales in Orange County Florida for each of the last eight years, going back to the insane market of 2005. Specifically, what I was looking at was the average and median percentage of sales price to list price ratio.
Rising prices, declining prices, climbing sales and declining sales markets are all included in this eight year span. Notice though, that the average sales price to list price percentage ranged from a low of 94% to a high of 99%, and the median sales price to list price percentage ranged from 96% to 100%. These numbers are based on the last list price of the sold homes, so many of the sellers did have to reduce their prices to get to the market value. Once a property is at the market value, there really is not a lot of negotiating that goes on with respect to the price regardless of the type of market we are in.