Standoff in a soft housing market

Michael Murgia expected to encounter desperate sellers in his search for a new home. He's in the process of buying a house in Tewksbury for around $5,000 less than the initial asking price, but Murgia had hoped he could bargain the price down even further after some issues came up during the inspection.

``When I went to renegotiate . . . they wouldn't budge at all," Murgia said.

Indeed, only now, months into a soft market, are home sellers finally beginning to concede on prices -- but only so much.

Prior to mid summer, home prices generally across the state had stayed flat, or were barely down -- some communities even had higher prices -- as sellers held fast to their starting number, despite mounting inventories of unsold homes.

In July, though, home prices statewide dropped 3.5 percent, with the median sale price for a single-family home dropping to $361,750 from $375,000 a year earlier.

Some communities had larger price drops. Randolph and Billerica saw median prices fall more than 8 percent in a year, for example, while Reading prices fell 7 percent, according to the Multiple Listings Service.

But while some buyers are starting to find bargains, brokers said many sellers still are reluctant to negotiate much, and many are unwilling to accept that their house is worth less than it was a year ago. Some homes continue to receive multiple offers, offering sellers some latitude in negotiations. And those sellers who do lower their asking prices are still likely to draw the line at a low-ball offer.

``I realize this is a buyers' market, but it's not a seller's suicide market," said Georgi May, a realtor based in Lowell.

Real estate agents advise potential buyers to pursue homes they like rather than to continue hunting. Not only does a buyer risk losing the property to another bidder, many brokers also fear that waiting for a while longer could mean dealing with rising interest rates, which could ultimately mean higher monthly payments.

``You could see some of that flexibility disappear," said David Hurley, broker-owner of Boardwalk Real Estate in Reading.

Donna Coffin, an agent in Marlborough, said some potential buyers have come in with unrealistically low offers. She will try to guide them with recent sales information so they can get a sense of what similar homes have sold for.

``What they're hearing is . . . go in low," Coffin said. ``They think the prices are going to come down further."

So, how should a buyer approach this market?

One issue for those seeking big bargains is that in many cases, homes are still going for their asking prices, or close to it. Right now, agents said, there is no rule of thumb for how low an initial offer can be -- each home is priced differently, and sellers have different bottom lines and different circumstances that affect their willingness to deal.

``There is no magic number," said Georgi Mueller, a realtor with ERA Morrison in Westford.

Certainly it is acceptable to offer several thousand below the seller's asking price to begin negotiations.

The potential buyer should be prepared to explain why they're offering less -- whether the property needs additional work, for example, or because similar houses nearby sold for less.

But buyers who assume they can automatically knock thousands off the price should be prepared to not even receive a response . Mueller suggested trying to build a rapport with the seller's agent to get a sense of where they're coming from.

Meanwhile, a seller who cut the price on a house while it sat on the market may be more willing to negotiate, while sellers who stuck to their original price despite months of inactivity may be less likely to want to deal, or are not in a hurry to sell.

Most brokers agree that prices probably will continue to drop. Many said the summer has been something of a stalemate, with both sides waiting to see who will blink first.

``The sellers are holding out, the buyers are holding out," said Lisa Luther, broker-owner of Realty World Advantage in Billerica.

After buying and moving into a new home in Carlisle, Denise Galejs has been unable to sell the family's four-bedroom home in Chelmsford, which has been on the market for several months.

She has tried tempting buyers with price reductions and money toward closing costs, but finds potential buyers to have cold feet.

``Sealing the deal is very hard to do," Galejs said. ``I think [buyers] must be very unfocused."