Home Prices Have Wiggle Room

Perhaps you have heard that home prices are dropping. Despite this headline, single-family home prices are still up 6.6% nationwide since last year. So, what’s going on?

“The answer lies in the difference between the asking price and the sold price,” says Cathy Vick, Sales Associate at ERA Justin Realty, “While more sellers are adjusting their asking price, that’s a signal of moderating demand – not falling home values. This is great news for buyers.”

Here’s what you need to know:

The asking price is a starting point. “When sellers list their homes, they sometimes set the asking price higher than what they’re willing to accept,” says Jennifer Darby Metzger, Broker/Owner of ERA Justin, “This gives them – and you – room to negotiate.” 

The sold price is the actual price that the home sells for. The sold price is usually lower than the asking price, as buyers typically negotiate for a lower price. This hasn’t been the case in recent years in a low inventory, tight market,” says Vick, “But the real estate market always ebbs and flows.”

When negotiating a lower price, the difference between the asking price and the sold price is called the “wiggle room.” This wiggle room gives buyers some flexibility to negotiate for a lower price without having to worry about the seller walking away from the deal.

“The amount of wiggle room can vary depending on the market,” says Metzger, “In a hot seller’s market, homeowners may have less wiggle room, as they can afford to be more selective about buyers. In a buyer’s market, buyers may have more wiggle room, as sellers are more motivated to sell.”

So, what does this mean for homebuyers?

If you’re in the market for a home, it’s important to be prepared to negotiate. This means doing your research, understanding the market, being realistic about your budget with a strong pre-approval from a mortgage lender ready to go. With a little preparation room for negotiation, you will find a home that you love at a price that you can afford. Cathy Vick or any of the agents at ERA Justin can help. Give us a call at (201) 939-7500.