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How The Improved Market Has Affected Buyer / Seller Negotiation
As of today home sales in Boulder County are up 24% for the year. At the same time inventory has been consistently low. These conditions have led to multiple offers in many cases. So the logical assumption would be that the average negotiation between buyers and sellers would have become smaller. Makes sense, simple economics. However, after looking at the numbers I am surprised.
Historically, the average negotiation off of the last list price of the property in Boulder County has been just under 3%. Here is a list of the average negotiation of residential properties in Boulder County for each year since 1999.
- 1999 – 1.37%
- 2000 – 1.36%
- 2001 – 1.76%
- 2002 – 2.41%
- 2003 – 2.83%
- 2004 – 2.66%
- 2005 – 2.44%
- 2006 – 2.77%
- 2007 – 3.15%
- 2008 – 3.23%
- 2009 – 3.80%
- 2010 – 4.14%
- 2011 – 4.11%
- 2012 – 3.16%* through June 27th
What I find interesting in the figures above are the macro trends in our market. Back in 1999 our area was one of the hottest markets in the country. Our appreciation (as measured by FHFA.gov) was ranked first in the nation, we were in the midst of a sellers market and the average negotiation off of list price was just 1.37%. During 2010 the number of sales had dropped by 40% from the peak in 2005, we had a negative appreciation (-1.9%, FHFA.gov), it was a full buyers market and the average negotiation was up to 4.14%. This year the market has showed some real improvement. We are ranked in the top ten in the nation for appreciation, sales are up 24% from last year and negotiation has fallen to 3.16%.
Delving more into the numbers I found that the difference in negotiation by price range is significant.
The simple table above compares the average negotiation by price range so far this year to the last six months of 2011. Overall sellers improved their negotiation range by around 1/2 %. This improvement held through most price ranges except for the luxury market over $1,500,000. In that segment 28 homes sold with an average negotiation of 3.4%. A huge improvement over the 7% that was recorded over the last six months of 2011.