Homebuyers Lose a Bit of Negotiating Power in August

Buyers negotiated slightly smaller deals in August than they did in July, negotiating  3 percent off the last listing price of a home, rather than 3.3 percent in July, according to Zillow’s August Real Estate Market Reports (which will be up on the site next week). That translates to a median discount of $6,525, as opposed to $7,018 in July.

It’s also down from January 2009, when buyers had the most negotiating power and were paying 4.5 percent less than the last listing price, or a median of $10,069.

It’s likely that slightly lower inventory levels have contributed to this. When there’s not as much to choose from, buyers give up a bit of negotiating power. We’ll have to wait and see what the winter brings. Sales usually slow down then, and many economists are predicting another wave of foreclosures that could send inventory levels up again.

But another good piece of news for potential homebuyers: Sellers continued to reduce the price of homes still on the market. Nearly one-quarter (24.7 percent) of listings on Zillow had at least one price reduction as of Oct. 1, 2009.

So, where do buyers have the most negotiating potential?

Just like in the previous month, buyers in Florida negotiated the deepest discounts in August. Vero Beach-area buyers topped the list, negotiating 8.9 percent, or a median $20,974, off the last listing price.

Below is a list of the 25 markets where buyers negotiated the most in August (click on the graph to enlarge the image). You can view and download the full list of metros here.