Working with condo buyers and sellers over the years has allowed me to see a lot of the interesting dynamics that occur between buyers and sellers. I thought it would be helpful for SCR readers to outline a few of the scenarios I’ve seen most frequently.
Keep in mind every situation is different and depends on knowing the real market conditions, particulars of the property in question, and dynamics between your Realtor and the other party’s Realtor. In other words, what may be a perfect strategy in once instance may be a disaster in another so strategize carefully.
Caveats aside, familiarizing yourself with some common scenarios is a step in the right direction.
- Smart Low Ball Offer
Seller has a property that’s been on the market for a long time and the price has not been lowered since listing, the unit is vacant, and there’s some imminent external conditions which will make it even hard for the seller in the future (e.g. major siding repairs, new construction blocking existing view, possible pending assessment, public fears of price declines, etc.).
In this case, the buyer is often well advised to submit and offer below asking price — especially if the buyer is not in love with the unit or in no hurry to move. The seller will usually counter and the buyer has room to be picky at inspection time.
- Unrealistic Low Ball Offer
Seller has hot property recently listed, priced consistent or slightly higher than recent sales, and in high demand with no major limitations.
In this case, the buyer who submits a below asking price offer will likely be outbid by another buyer. Sometimes even more frustrating, the two parties enter a series of bad faith counter offers ending up at a higher closing price than had the orignal offer been more reasonable. Even worse, this often also involves increasingly unyielding post sales agreement negotiations (e.g. inspection repairs, closing extentions, rent back agreements, etc.).
This was a very common occurence late last year when many frustrated buyers were worried about a softening market and butted heads with more confident sellers.
- Full asking price offer
Seller has a good property, not super hot and not super cold. Property has been on the market for a reasonable period (again, not too long or short) and is priced consistently with sold comparables.
In this case, the buyer can usually submit a single offer at the full asking price, the buyer’s Realtor makes it clear this is a final and fair offer, the seller accepts and good will remains for reasonable inspection repairs.
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Aren’t the factors you mention taken into account when assessing “fair market value”?
Yeah, that’s a loaded term. I’m gonna edit the post to make it clearer.
Fair Market Value is a term that varies daily in the Atlanta Market now. with the mortgage market going down the drain,builders are droppping prices hoping just to break even. I think in just the last 60 days the days on market have increased 30 days to around 4-5 months. Is it the same in your area?
We are seeing an increase in inventory, however, the days on market hasn’t changed too much.
One of the reasons is the local economy is doing quite well.
Check out this article about future high tech employees (i.e. future condo buyers)