If I've heard it once, I've heard a bazillion (which, according to www.AntiMoon.com is an actual English word, but not necessarily a real number) times: "I want to leave in some negotiation room in my price."

We have statistical evidence (at least in the local MLS here in the Washington, D.C., area, which is the largest multiple listing system in the country) that those who "leave in some negotiation room," never have to worry about negotiating their price because they never have to face the grueling exercise of lowering their price -- because they never sell.

In the real estate world, we have a classification for those type listings: expireds and withdrawns. Pretty much it means they don't sell because they never hit where the buyers are biting.

A quick search of the MLS reveals that in the last 30 days the Northern Virginia market had 7,915 houses for sale; 876 went to settlement; 820 went under contract; and 1,614 came off the market by either expiring or being withdrawn.

(Granted, many of the withdrawns went from company A to company B, but it still points out that sellers are overpriced and expecting too much for their houses even in the midst of a buyers market. Once they switch companies it is almost always accompanied with a price improvement.)

The sellers who move on down the line with pricing and incentives become "former" owners and move on with their lives. Case in point:

A buyer recently told me her builder representative said the company had a weekend sales bonanza simply to move as much inventory as possible. I checked into it and sure enough, they wanted to sell 1,000 sales over a three-day period. Their prices dropped across the board (already down $36,000 from their base price) and the builder had authorized ANOTHER $10,000 for settlement costs per transaction.

Instead of 1,000 sales, the buyers came in and chewed away 2,100 properties that had been sitting for months nationwide. This particular buyer had walked away from one of their speculation houses three weeks earlier. By waiting, she picked up an additional $22,000 in savings.

Negotiation room? I think not. By biting the bullet, bringing the prices where the fish were biting, they made their money back through doubling their unit sales. It surpassed their goals and surprised everyone on the grassroots level.

So when a seller tells me s/he wants to leave enough room in the asking price for negotiation room, I tell them to take another gander at the statistics. The rationale goes something like this: if home sales are consummating at 3 percent below asking price, then I need to be up 3 percent to get the price I really want. Think about it -- if I can price it so that several buyers want it, then I don't' have to give up my price. (Review last week's column.)

If you price right, actually you don't have to come down at all. Many of the houses in our market area are selling for the asking price. In addition, about 40 percent are selling without the seller providing any closing costs as well. These are the houses belonging to sellers who dared to meet the buyers in the market instead of hoping the buyers would come up out of the market to make an offer.

Forget nudge room, fudge factor, and space for negotiation. Place the house on the market at a bold price -- then hold the line. Then, if the buyer wants closing costs -- negotiate upward.

There's always a good market in any market -- it's where the sellers focus on price and condition, rather than their personal bottom line.

Published: September 28, 2007

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Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple. Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.