By Andy Randles, Flyhomes Client Advisor
“Are you ready to buy a house?”
“Yeah! I’m looking for a good deal … Scratch that, I’m looking for a great deal!”
The homebuying market is unique for most people because it’s the first time they’ve entered into a truly free market where prices are arbitrary and can oftentimes lead buyers astray.
Unlike buying groceries, electronics, or home goods, where prices are set by the manufacturer (and may be lowered during a sale!), prices are not set in homebuying.
The actual purchase price of a home is often different than what’s initially advertised. I’ve sold homes at a 13% discount from original list price and homes at a 13% premium over the original list price.
This uncertainty can be frustrating for buyers for obvious reasons – are the homes they’re looking at too cheap or too expensive, given their budget?
A great buyer’s agent can help educate buyers on what to expect for their market.
Supply and Demand
Supply and demand dynamics will dictate home valuations and sentiments.
In a seller’s market, buyers should anticipate paying over list, and in a buyer’s market, they should anticipate paying below list. It’s up to your agent to help educate you on the current market trend.
So, what about getting great deals? How can you find that home with a 13% discount? And avoid the homes with a 13% premium?
It’s important to remember that when sellers list their homes for sale, they have a perception of what the home is worth … but it’s up to the market to determine what the true value is.
Let’s consider this scenario. We have a home in a 10-year-old subdivision where homes are nearly identical, and all recent sales are within 1% of each other.
Seller A decides to list the property at 10% below the median of sales from the last 6 months. This home will be competitive as multiple buyers see that it’s priced “low,” naturally creating a multiple-offer scenario and driving the price to about where the median is.
Now, let’s consider Seller B, who has an inflated sense of the value of the home. Let’s assume he considers the valuation to be 10% over the median of comparable homes. This price will drive very low interest in the home as buyers recognize that it’s overpriced.
So, what happens? Seller B’s home will either sit on the market until prices appreciate enough to match the listed price point, or a buyer will offer below list, and the home will sell for what the market sees the home to be worth.
In both of these scenarios, the home ends up selling for what it’s worth. Both deals are neither good nor bad, because it’s the market that decides the true value for the home.
Information Overload + Home Prices
In today’s market, it’s important to remember how accessible information and data points are for sellers and their agents.
Listing agents will scour through historical sales data to help their sellers develop a pricing and selling strategy. This will help the seller decide: Does it make more sense to list the home low? Or should we list at the price we want to sell for?
In a seller’s market, sellers frequently list low to generate significant interest in the home, cause a bidding war, and sell the home for well above list.
In a buyer’s market, sellers typically list the home for its expected value and wait for the right buyer to come along.
Lastly, we need to remember the easy accessibility of heavily iterated machine-learning software and all the data that’s within reach in a transparent market, including comparable sales points.
In today’s world, why would a seller accept a lowball offer? The only logic would be desperation.
If you see a price that appears low and there’s no offer review date, you just might have desperate sellers and be able to buy low. However, if you see a low price point and an offer review date, you can expect to pay whatever the fair market value is.
How to Make Your Offer More Valuable
Let’s consider now the value your offer is bringing to the table. What’s in it for the seller if they accept your offer?
One of the best value-adds of working with Flyhomes is our Cash Offer program. With our cash offers, we empower our buyers to bring more value with their offers than a traditionally financed offer.
Ultimately, price is not the only factor that matters, and sellers love seeing a cash offer because it means they have no worries about the buyer’s ability to close the deal. Our cash offers make it easy for sellers to select our offers, and sometimes at a price concession over traditionally financed offers from competing buyers.
The way I see it, homebuying is not a game of waiting for Black Friday Deals, but our cash offers can make your offer so strong, it may just feel like you’ve won out on that Black Friday pricing.