Posts Tagged ‘real estate price points’

How price point determines your negotiating power

If you’ve had a chance to read our previous market updates, you know that Denver has a buyer’s market for expensive homes, and a seller’s market for less expensive homes. We wanted to know how that difference played out in negotiations between buyers and sellers.

We looked at the difference between the last list price and the final contract price on homes sold in Denver, Cherry Hills Village, and Greenwood Village over the past twelve months by price point. The graph below shows what we found as a percentage difference.

As you can see, on average buyers purchasing a home between $400,000 and $600,000 were able to negotiate their final price down by only 3.91% from the last offered price. Between $1.0 and $1.2 million, however, buyers were able to negotiate down a whopping 9.93%. Luxury home buyers have 150% more negotiating power than lower end home buyers.

You probably noticed that the negotiating power for buyers is slightly higher in the first two columns than the third. We took a closer look at the data and found that quite a few of the properties in the first two price ranges, especially between $0 and $200,000, were real dogs. Sellers have a tougher time negotiating a price on properties listed as “uninhabitable”, “possible mold”, or “as is”.

You can see from these numbers that a luxury seller who drops their price $50,000 has not really enticed a new pool of buyers much. $50,000 is about half of what an interested buyer would negotiate down anyway. On the other end, a buyer who expects to purchase a $400,000 home for $360,000 will on average find it frustrating to come to agreement with a seller.

Of course every deal is different and each has to be given its own consideration, but having a sense of the numbers is essential to getting what you want. If you or someone you know would like to purchase or sell a home, we would be grateful for the opportunity to put our knowledge to work.