What is "Asking Price"? - A Real Estate Investor's Approach

As investors, it is important to remember that the "asking price" of a house is not the same as the sales price on a piece of merchandise in a retail store. While there are those among us who will negotiate with anyone, anywhere - most of us just don't feel comfortable haggling with every salesperson that we meet (especially those not paid commissions). The majority of us realize that unless there is something wrong with the item, then an hourly employee just isn't in the position to offer us a discount, even if we are a world-class negotiator.

This simply is not the case when it comes to the asking price for a house. It really is just what the seller is "asking" for. As buyers, and especially as investors, we may reasonably ask the seller to accept a lower price, because he does have the power to say, "Ok, I'll give it to you for that much."

You can think of asking price in this way: when a house first comes on the market, the seller prices it at the high end of what they expect the market will pay. Over time, if their price isn't compelling enough to force a sale, then they will lower it. Sometimes a house is reduced in price many times before it finally sells. Wouldn't you be doing the seller a favor by making your lower offer in the beginning and giving them a chance to sell their house right away rather than after months of letting their house languish on the market unsold? Of course, many sellers will say no, but you needn't fell shy about asking.

My big picture advice when it comes to asking price: it is not some fixed magical number. It is an educated guess of what the seller (and his/her real estate agent) thinks the market will pay. There are many factors that can cause this number to change. So don't be afraid to ask for the price you want!

Until my next post,

James