Play the averages
Denver real estate average time on the market is still hovering in the 3-4 month range for most areas. This doesn’t necessarily mean it’s panic time for Denver sellers. The Denver real estate market has been holding at this level for some time, and most folks realize that it’s going to take a few months to sell their home once it’s on the market. 
Is it low ball time?
No. If you look at the list price vs. sold price in most Denver area neighborhoods what you see is a difference of a few percentage points. The trend seems to be around a 3% average difference between list and sold prices, with some pockets of strength that are holding more towards the 1-2% range. Three percent is not bad. And it’s certainly not a call for Denver real estate buyers to start submitting low ball offers. Offers of 10-15% below list are likely to be countered much closer to the list price than if buyers and their agents take some time to structure an accurate purchase contract.
So how to you determine the purchase price?
It’s a good question. If your Realtor is telling you that it’s a buyer’s market and you’re gonna get a home for 10-15% below market…guaranteed! Then you’re being fed a line of garbage. It is possible to get a home for 10-15% below list price, but not likely even in this market (if the home is accurately listed in the first place of course). Offer prices need to be calculated on a neighborhood by neighborhood basis by examining the recent statistics for that particular area over the last couple months. Maybe a particular Denver neighborhood can justify an offer of 20% below list price, but there is simply no hard and fast rule of thumb. I’d be the first one to advise writing an offer at 20% below list price, but only if there is a justification for that offer. The only rule of thumb is that you need to research the area before you go stampeding off with a low ball offer. A low ball offer does not serve anyone.
Denver real estate has taken a beating in the national media. But you simply can’t believe everything you hear on the news. National media has picked up on the high foreclosure rate in Denver and equated that to “the bottom has fallen out of the Denver real estate market.” Not true. And if your agent is feeding you the same story then he’s either feeding you a line of garbage in order to keep your business, or he’s simply not willing to do the research required to structure a legitimate contract.
Low ball offers don’t serve anyone. They’re a waste of the agent’s time, the buyer’s time, and an insult to the sellers.
A skilled agent does research
Before submitting an offer, your agent should be able to tell you the list vs. sold trends for a certain area. He should also be able to defend the purchase price you are submitting if questioned by the other agent…that is negotiating. Throwing in a low ball offer and hoping for the best is not negotiating..it’s lazy.
I’ve actually refused to write low ball offers for clients. After explaining that the client is much more likely to save money if we do some research and submit an offer that has a chance of being accepted, most clients will come around and see the logic behind this technique.
But I’ve also written low ball offers when justified…but then they’re not really a low ball because they’re justified. If the house has been languishing on the market, maybe my buyer has all cash, there are structural issues, foreclosure is imminent, etc. But as a general rule of thumb a low ball offer will be rejected or countered very high if there is really no justification for it other that the buyer and agent are fishing for desperation.
Denver real estate is not in the tank. Don’t believe the hype! And don’t believe the hype if your agent is telling you that you’re going to buy your next house for 15% below list price…guaranteed! It’s a line of garbage. You’ve simply got to do the research neighborhood by neighborhood before submitting an offer. Sorry, there’s no way around doing a little work.
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