How to Know When to Offer List Price to the Seller

Why Would a Buyer Ever Give a Seller the Asking Price?

Couple signing a real estate contract to buy a condo at the list price.
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If you're in the market for a new home, and you've found one you like, you might not want to offer the list price to the seller initially. You might believe that it is human nature to want to negotiate. But most people, if asked, will say that they do not want to negotiate and sometimes feel uncomfortable offering to pay less than the asking price.

Imagine how chaotic it would be if everything were negotiable. Suppose you were walk into a bakery to buy a loaf of bread and, instead of ringing up your purchase, the baker were to ask you to submit a bid. How much would you offer? Wouldn't you rather hand over a $5 bill, wait for your change, and leave with your bread?

People are expected to negotiate when buying a home. It doesn't matter whether it's a newer or older home; all home prices are negotiable. On the one hand, you don't want to pay more than you need to pay. You don't want to be taken advantage of. On the other hand, you want a good value and an affordable mortgage, so you might need to negotiate. How much do you offer? And why would a buyer ever give a seller the asking price?

Key Takeaways

  • Although all home prices are technically negotiable, there are good reasons to offer the full list price on a home you want.
  • Offering the full price can make the seller and their agent more eager to cooperate throughout the sales process.
  • A list-price offer also leaves you more room to ask for repairs or other concessions.
  • If you truly want the home and can afford the list price, it's probably a good idea (and you'll be able to check it with the appraisal).

Reasons to Offer the List Price When Buying a Home

Suppose you've been looking for a beach house, and you've scoured oceanfront properties up and down the California coast. You find that everything is expensive, from San Diego to Eureka up north. But then you finally locate a great buy, and it's the least expensive oceanfront home anywhere because it's in foreclosure.

The first thoughts that may cross your mind are: How low will the seller go? How cheaply could I buy that property? If you're not careful, you might make mistakes, such as overlooking the fact the home is already priced below market because it's in foreclosure. In that case, you might miss out on the deal if you were to offer anything less than the seller's asking price.

There are several reasons to offer the list price:

To Gain Seller Cooperation

There are other factors inherent in the purchase contract that might be equally as important as the price. You might want the seller to pay for inspections or reports, which a seller is more likely to do if you pay list price.

To Lock out the Competition

In the event of multiple offers, you can bet that another buyer might try to negotiate, making your list-price offer look even better.

To Make the Listing Agent Look Good

You validate the suggested list price when you offer the list price. If the listing agent suggested that price, the listing agent might urge the seller to take your offer if for no other reason than it makes the listing agent look competent. A happy listing agent will find less wrong with your offer and might be inclined to overlook an item that the agent otherwise would encourage the seller to counter.

To Leave Room for Repair Negotiations

If you squeeze every dime out of the transaction on the front end, there might not be any room left for negotiating the cost of a repair. An irritated seller is unlikely to be receptive to a request for repair after you've slashed the sales price upfront. They might feel as though you're adding insult to injury. However, if you're paying the list price, the seller might be willing to throw back a little of the cash in your direction.

If There Is No Nickel-and-Diming, There Is Less Resentment

It might not be important to you during negotiations to be on friendly terms with the seller, but it can come back to bite you after closing if the seller resents you.

If you like the home, and the price is attractive and acceptable to you, then maybe you should buy it, and at the list price. You could lose the opportunity to own the home otherwise. In the long run, it will make little difference as long as you own the home. Before you negotiate, ask yourself: Is it worth losing the home over a few thousand dollars?

Your ace in the hole, if you're getting a loan, is that the home still needs to appraise at value. If you have offered the list price, but the appraisal doesn't at least match it, the seller just might be willing to lower the price for you. In most instances, you can't go wrong by offering list price to the seller.