$9,000 off a $430,000 asking price is NOT a reduction, it’s a rounding error. The 2% is barely statistically significant, the buyer is effectively paying ask. The article cited below makes out it’s a big deal, and turns out to be a puff-piece trying to keep buyer interest buoyant. As listings rise and sales stall or drop, buyers will find out that ‘low-ball’ offers start at 20%, 25%, 30% below asking price. BC MOI is 9.3 months and climbing. If you absolutely have to buy, wield a big stick. – vreaa
This anecdote from an article by Derrick Penner, Vancouver Sun, 15 July 2010 -
“When Maple Ridge’s Monika Novosadova went house hunting this spring, she faced an embarrassment of options looking at 28 homes before coming putting an offer down on a three-bedroom single family home at the end of June. And it was a shrewd offer since, like much of British Columbia in June, she faced a buyer’s market with rising inventories and declining sales putting home-hunters more in control.
“I felt I had cards in my hand because it was a buyer’s market,” Novosadova said in an interview. “And I felt fairly confident the price could be negotiated down.” So the single mother wound up getting the house, in a “perfect family neighbourhood” for $421,000, not the $429,900 it listed for. Now she’s excitedly looking forward to moving into the home with her 10-year-old daughter in September, and her realtor Ron Antalek said Novosadova’s experience is typical of what other buyers are facing. “There’s not the necessity of multiple offers and competing bids,” Antalek said. “People are able to shop. They have time to compare.”
From the same article:
Across B.C. in June, realtors recorded 7,722 sales, down 22.5 per cent from the same month in 2009. Active listings in inventory, climbed almost 21 per cent to hit 59,232 units in June, which equalled a 9.3-month supply based on the pace of sales. [9.3, where have we seen that number before? Oh, yeah, it's also Vancouver's price:income ratio. - ed.]
Funny stuff. Keep it up, mate.
Hey…here’s the “If I won the Lotto” house I have been watching…
MLS® V840846
original asking price was 3.5 million…now down to 2.99 million…first reduction…I think the place is actually worth 1.7-1.9 just for property which is still way beyond my means
Unless I win the lotto
Yeah, agreed, that is a nice house. It is, however, currently functioning as a care home, so renos would be necessary. Properties like this will sell in the $1.5M-$1.8M range in the trough.
this article is pretty funny, why would this even be news, like it’s a huge anomaly that someone got 2% of asking, it’s just one big gang running the show, doing psych-ops whenever necessary.
Thats nothing. A place I have been watching in my building listed at 279K in Jan. Went to 269K in march. Just had another price reduction, this time for $1000. Why would you even bother? That extra 1K off makes no difference to any buyer.
That being said, it is worth it to negotiate hard for an extra few thousand off. If downpayment and monthly payments are the same, its like taking the money right off the end of the mortgage.
Say you get an extra 10K off and get a 25yr mortgage. If you still make payments as if you paid the extra 10K, you will save big over the long term. Say interest is 5% for the life of the mortgage, you will save 23K in interest over the life of the mortgage.
The same applies for adding an extra 10K to your downpayment.
The problem is that interest will never be 5 % for the lifetime of any mortgage, we have historically low rates, and i doubt they will be 5% 30 years from now, that’s the problem, people are waaay to complacent with these rates and they will just never change.
“Say interest is 5% for the life of the mortgage”
that’s what way to many people are saying right now, just wait when the rates rise a couple percent, then we’ll see this bubble pop
Yep, it is highly unlikely that you will keep a 5% rate for the life of the mortgage. Unless of course, you only have a 5 year mortgage.
I used the low number to show that even at low interest you can still save a lot by negotiating a lower price or raising your downpayment. If you want to assume 8% for the life of the mortgage then you will save 58K in interest with an extra 10K downpayment. Assume 12% and you save an amazing 160K in interest by paying 10K less upfront. Of course, it is pretty unlikly that someone would get a 25 year mortgage at 12%. The interest paid over the life of the loan would probably be 5X the value of the house.
Funny story. It is quite pathetic how Sun spins a story, presenting price reduction of measly 2% as a good bargain. When we bought our condo seven years ago, we offered 15% off the asking price and it was acceppted immediately. I noticed that realtors have this attitude “not to offend the seller” when it comes to writing up an offer. Several years ago, in the fall of 2007, we had to fire a realtor who would not write an offer with 10% reduction. That condo was taken off the market, re-listed in the spring of 2009, and still has not been sold, even though the seller reduced the price by 10%. So, the realtor d-bag actually did us a favor.
“I noticed that realtors have this attitude “not to offend the seller” when it comes to writing up an offer.”
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Agreed, I’ve seen exactly that myself. In the 90′s, a realtor who thought ‘lowballing’ meant offering 2% off the ask on a property that then sold for >10% off ask.
“not to offend the seller”
Scam. What do feelings have to do with your money? It should always be just business. If they don’t want your money they don’t need to take it!
I have bookmarked a few listed properties and watch them sit on the market, like a little hobby. F1011561 has been sitting doing nothing since, I think it was the beginning of May I first bookmarked it. A few weeks ago they finally knocked a huge $5,100 off their price, essentially so that they could put a “new price” tag out on the realtor sign. Whooo, a 1% reduction, be still my heart!
Ah, yes, I remember now why I started watching it in the first place: I can never resist when the ad says “Don’t wait on this one!”