We’re often asked by our clients, “How much under the listing price should we offer?”
This is an excellent question.
The answer is difficult. There are four basic ways that sellers price their homes.
1. Ridiculously Overpriced!
These sellers have listened to a real estate sales person over-inflate the value of their home in an effort to obtain a listing.
There is a natural tendency on the part of sellers to list with the real estate salesperson who gives them the highest promise.
“Buying a Listing”
Some real estate agents give the seller a high “value” just to get the contract signed. These homes can be 10-20% overpriced.
These sellers may need a “dose of reality” for a few months before they begin to realize that their home is way overpriced as compared to others in the area.
The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price.
2. A Little Overpriced…
Perhaps 75% of all homes for sale are priced in this range.
These sellers fall into two main categories:
- Those that feel their home is worth every penny of their asking price.
- Those that want to leave a little “negotiating” room.
These homes can be 3-10% overpriced.
3. Priced At Fair Market Value…
These sellers have carefully and realistically studied other homes for sale. They have priced their homes very competitively.
These homes usually sell within a few weeks at or very near the listed price.
Tip: “He/she who hesitates is lost” aptly explains buyers who dally to make a buying decision today.
In an active market, timing is everything. In the good old days, you might have the luxury of viewing a home several times – even dragging your relatives to see it… before you actually made an offer.
4. Priced Below Fair Market Value…
These homes are priced below value.
Perhaps the seller wants a fast sale. Perhaps their real estate salesperson recommended too low of a price.
These homes usually sell within 1-7 days, at or above the listed price.
You may need to make your first offer your best offer.
There are usually competing offers in this situation.
Summary: Decoding the Price
- ✅ Ridiculously Overpriced: 10-20% high. Requires patience for a “reality check.”
- ✅ A Little Overpriced: 3-10% high. Most common scenario (75% of market).
- ✅ Fair Market Value: Priced to sell. Act quickly.
- ✅ Below Market Value: Expect multiple offers and bidding wars.
Understanding which category a home falls into will dictate your offer strategy—whether you negotiate hard or come in with your best offer immediately.
