As I’ve often discussed before (since 2007, even), our local real estate market is really a ‘tale of two markets’ — those listings that are “in the market” — meaning they are priced competitively given their location and condition, and those “out of the market” — meaning they are over-priced given their location and condition.
Though average days on market for Northern Virginia is hovering in the 60-80 day range, you can observe this “two market” phenomenon partly in the histogram shown at the bottom of this page of my website (where I monitor these stats each month). The histogram breaks out how many days a property was on the market before it sold; so rather than an average, it shows you how many of the sold properties sold in the first month, vs those that sold in the 2nd, 3rd, 4th, or later than 4th month on the market. I explain this phenomenon of pricing a home well and getting an offer in the first 30 days more in this post.
Serious buyers who spend time looking at properties are not surprised that some properties seem to fly off the market, sometimes selling even before the first open house (yes, I’ve seen this many times in the past few weeks.) So it’s clear that if a buyer sees a property that is “inthe market” that they like, they need to be prepared to make an offer quickly.
Well the first part is easy: of course you can bid below asking price. You can bid whatever you’d like, but the seller doesn’t have to accept your offer and the mere act of putting an offer in invites competing offers. When they receive your offer, good listing agents will call everyone who expressed interest and tell them “We have an offer; would your client like to put an offer in as well?” Fence-sitting buyers are often a lot more motivated once they see someone else wants the property. And subsequent buyers assume your offer was a competitive one, and more likely than not will put in their own very competitive offer. So if you bid too low you invite competition.
To answer the second part, I did some research on the past 30 days of sales in Northern Virginia. I pulled data from our Multiple Listing Service for all sales that were on the market fewer than 21 days when they sold. I think this is the best way to see, on average, what price a seller was willing to accept if a property was “in the market” such that it attracted an offer early. Here is what I found:
Average List Price: = $397,399
Average Sold Price = $395,714
Average List-to-Sales-Price Ratio = 99.6%
The lesson for Sellers: If you price it right, it will sell for very close to asking price within 30 days.
The lesson for Buyers: If you see a property you think is “in the market” and meets your needs, you need to move quickly, and you need to make a realistic offer.
Source: MRIS as of 3/6/10. Data deemed accurate but not guaranteed.
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