Offer Pricing Strategy Guide: Choosing Between Over or

Asking price is a marketing strategy, not a market value. Don't let list price alone determine your offer.

Under Asking Price

If the property is priced 5 to 10 percent below market value, consider offering at or slightly under asking price.

Repair Discounts (10-15%)

For properties that require repairs, listings can be priced 10 to 15 percent below market value. Offer at the lower end of this range or negotiate repairs after your offer is accepted.

At Asking Price

When a property is priced at market value, it's essential to research recent comparable sales and consider days on market, price cuts, and offer counts before submitting your offer at asking price.

Over Asking Price

• Bidding Wars (1-3%): Properties in high demand can fetch offers 1 to 3 percent over asking price, but be prepared to act fast.
• Competitive Markets (5-10%): In bidding wars where multiple parties compete, expect to offer up to 10 percent over asking price.

How to Calculate Your Exact Offer

Seller Conveniences to Consider

• Pre-approval: A strong pre-approval letter reduces a seller's financing risk and can offset a lower offer price.
• Close Timing: Matching the seller's preferred closing date can make your offer more attractive than a higher bid on a mismatched timeline.
• Rent-Back: Offering the seller a short rent-back period after closing can ease their move and strengthen your position.
• Contingencies: Fewer or waived contingencies (where safe to do so) signal certainty to a seller weighing multiple offers.

Ask Your Agent

• Pre-approval Letter: Ask whether a stronger pre-approval letter from a different lender type could help your offer.
• Close Date Flexibility: Ask what closing timeline the seller has indicated, and whether flexibility on your end adds leverage.
• Rent-Back Options: Ask whether offering a rent-back period is common in this market and how sellers typically respond.
• Contingencies: Ask which contingencies are safe to shorten or waive given the property's condition and your own risk tolerance.

This guide provides examples of common scenarios and negotiation tactics. Always consult with a real estate advisor for personalized advice.

Why is it important to consider the asking price as a marketing strategy rather than market value?

Answer: The asking price serves as a crucial marketing tool that attracts potential buyers and sets the initial negotiation stage. It should reflect the property's perceived value, not just the current market value.

What is an appraisal gap and how does it impact the offer pricing strategy?

Answer: An appraisal gap occurs when the property's appraised value differs from the agreed-upon purchase price. This discrepancy can affect loan approval, negotiations, or even the deal falling through, so understanding this concept is essential in your offer pricing strategy.

What are some common negotiation tactics used by agents during an offer process?

Answer: Agents may employ various strategies such as escalation clauses, best and final offers, or contingency waivers to help their clients secure a property at the desired price. These tactics can provide a competitive edge in bidding situations.

How do days on market (DOM) and price cuts influence the offer pricing strategy?

Answer: Properties that have been listed for an extended period may require price reductions, making them more attractive to potential buyers. Understanding DOM trends and common price adjustments can help you determine a competitive offer.

What are some common contingencies that buyers include in their offers, and how do they impact the negotiation process?

Answer: Contingencies like home inspections, appraisals, financing, or sale of a current property can be included in an offer to protect the buyer's interests. These contingencies may be subject to negotiation between the buyer and seller, so being aware of their implications is essential when formulating your offer.