One of the biggest mistakes you can make, as a buyer, it to try to negotiate based on an asking price. Some asking prices reflect the market value, plus a little for negotiation. Some are just a fantasy that the seller wants to try.
Below is the market history of a real house.
I have left out the first number on the price to protect its anonymity. (It was more than $600,000 to start.) I know about this house because last winter, I was looking at cancelled listings for one of my buyers. When I asked the listing agent whether it would be back on the market this spring, he said it would be in March at $X95,000.
2/2007 Listed for $X95,000
4/2007 Price Changed to: $X00,000 (+$105,000)
4/2007 Status Changed to: Extended
5/2007 Price Changed to: $X95,000 (-5,000)
6/2007 Price Changed to: $X49,000 (-50,000)
7/2007 Price Changed to: $X95,000 (-50,000)
7/2007 Status Changed to: Extended
9/2007 Price Changed to: $X89,000 (-10,000)
9/2007 Price Changed to: $X69,000 (-20,000)
10/2007 Price Changed to: $X65,000 (-4,000)
11/2007 Price Changed to: $X39,000 (-24,000)
11/2007 Status Changed to: Extended
11/2007 Price Changed to: $X38,000 (-1,000)
12/2007 Price Changed to: $X65,000 (+27,000)
12/2007 Status Changed to: Canceled
Then it went back on the market:
3/2008 Listed for $X95,000 (+30,000)
3/2008 Status Changed to: Under Agreement
4/2008 Status Changed to: Sold
4/2008 Sold for $X95,000
I bet the buyer felt lucky to have swooped in before someone else snatched up this bargain! Too bad he wasn’t house hunting last November; he would have saved $57,000.
So, the lesson is that when you hear someone giving advice about always offering some amount or percentage under asking price, ask the advice-giver “which asking price is that, the first one, the second one, or the ninth one?”