Definition of "Asking Price"
In real estate, asking price is referred to as the amount set by the seller, the amount he/she wants to receive for the purchase of their home by the buyer. The asking price isn’t always the same as the final price that is paid by the buyer, but it is the price that the seller initially sets, the price that can start a negotiation between the two parties.
Typically, the asking price is the lowest value a home seller will accept to sell the property. It is also called a listing price, and this is actually the amount the seller hopes to receive from the buyer during the transaction.
How does the market affect the asking price?
The seller needs to know the situation of the market when they determine the asking price as that will depend on the market conditions. Several factors can influence the asking price like the home’s age, the size of the property, features, upgrades, etc. It is also a good idea to look at similar recently sold homes in the area, and by contacting a real estate agent, the seller can ensure a competitive asking price for the property.
During a seller’s market, the home buyer’s offer is generally from the asked price up. The seller sets the asking price, and more buyers might be interested in the property. This can lead to a bidding war between buyers, which will increase the final price. The best offer usually wins. However, there are times, especially in a buyer's market, when a negotiation is done, and the house is sold below the original asking price. If there are fewer buyers interested in the property or only one, that buyer might also look at other properties. In this situation, the game is reversed, and the houses have to “give the better offer” sort of speak.
That’s why having a real estate agent with you when selling a home is so important. Getting the asking price the closest possible to the fair market value is a challenging and complicated task that homeowners hardly get right. A real estate agent is the most skilled and experienced person to do that job because they deal with asking prices of similar properties every day in their profession. They see how those prices do with home buyers, how much higher and lower from the asking price the fair market value strays.
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