Recently at a seminar for Home Buyers I was asked, "How much should I offer? Is there a rule of thumb?" At the time I said that how much you offer, depends on how much you think the property is worth. While I believe that this is the correct answer, I appreciate that if you are buying for the first time - or are buying in a market with which you are not familiar - this answer by itself does not give you much insight or comfort as you look ahead at the process of buying a home. Looking at properties that have sold can provide some insight into the way the market operates. Here is an analysis that looks at single family homes that sold in the Halifax area: - in the first month of 2006
- for between $80,000 and $225,000
I have excluded condominiums because the market is smaller, and because, with other similar units for sale in the same complex, the sale price is usually closer to the listing price than with other market segments. There were just over 200 sales, the period analysed was 5 weeks, and the market was quite active considering the time of year. The first analysis looks at the 'discount', the difference between the original listing price, and the time a property had been exposed to the market.  In the table below, the 'discount' - the selling price for properties that sold in less than 30 days, was on average 2.9% less than the original listing price. | Less than 30 days | 2.9% | | 30 to 60 days | 5.5% | | 60 to 90 days | 5.9% | | 3 to 4 months | 7.85% | | 4 to 5 months | 8.5% | | 5 to 6 months | 11.1% | | 6 to 7 months | 11.4% | | 7 to 8 months | 10.9 % | | 8 to 9 months | 10.55 % | | Over 9 months | 12.6% | These 'discount' percentages look pretty normal. Remembering that this discount is the difference between the original listing price and the selling price, the fact that the averages for properties which have been one the market for more than 60 days are this uniform suggest that on average, Realtors® are doing a good job of bringing properties to the market at close to market value. What the above table and graph do not show, is that about half of these properties had at least one price reduction, and 25 percent of the properties sold at a discount higher than the average. In this table and graph you can see that 25% of the properties sold at a discount greater than the highest average in the chart above. | More than 20% | 12 | 6% | | 15 to 20% | 17 | 8% | | 12.5 to 15% | 23 | 11% | | 10 to 12.5% | 21 | 10% | | 7.5 to 10% | 38 | 19% | | 2.5 to 7.5% | 37 | 18% | | Within 2.5% | 55 | 27% | The challenge for a buyer is to determine whether the property you are looking at today is one that will be on the market for only a few days, two months, six months, or more. And, ...will it ultimately sell for very close to the listing price, the average discount or, will it sell at a larger discount and be one of the exceptions that prove the rule?
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