Who’s Your Santa

We analyzed 7,000+ sales transactions in Denver from the past 12-months to see which type of seller (builder, government, bank, individual, or relocation) was willing to give the biggest discount off their final asking price to get their home under contract (see graph below).

Ebenezer Builders are the least likely to give up much on their prices.  In truth they do offer incentives through material upgrades instead of price discounts.  They are also adept at understanding what buyers want and are willing to pay.

Government and bank sellers are a bit trickier, because they are not, or perhaps should not, be in the business of selling homes and need to move inventory efficiently.  In many cases they underprice homes to create buyer frenzy and force prices closer to market value.  Their “drama pricing” skews the numbers to make them appear, at least in this analysis, not as giving as they might be.

Relocation companies that corporations hire to help sell moving employees’ homes are full of good will and much merry!  In some cases, certainly not all, relocation companies will make up the loss between what their seller paid for the home and how much a buyer is willing to pay for it.  To the home owner, once they are underwater, they don’t care how much of a loss the relocation company will take.  There is a limit to how big the spread can be, but usually it’s quite generous.  Knowing that they have a second round of negotiations for inspection items, sellers are motivated to pass on a bigger loss to the relocation company on the purchase price in order to avoid having to shell out money for inspection items, a cost that most relocation companies will not cover.

It’s easy to assume that the biggest discount equals the best value.  That’s not always the case.  A well priced home with a small discount may be a better value than an over priced home with a large discount — each deal is unique.
We hope you enjoyed our last e-letter for the year, and if we may assist you or some you know buy or sell a home we would be grateful to hear from you.  Thank you for your support in 2011 and here’s loking forward to a great 2012!
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