How Being Afraid Of Low-Ball Offers Attracts Low-Ball Offers
This is a great story about how being afraid of low-ball offers when selling your home winds up attracting low ball offers. The figures in this post have been changed to protect the innocent.
Whenever we talk with someone about selling their home, we go over the 3 strategies to price your home. We emphasize that it is YOUR home because we will give you professional advice, the same advice I would give a member of my family, and the final decision is up to you.
Occasionally we have a client who wants to price their home above the recommended market value. When we are in that situation, we do everything we can to get that price and the truth is sometimes the owner of the house is right and a buyer pays a higher price than expected.
What we don’t want to happen is to sit on the market for too long at too high of a price. Most buyers want to know how long a home has been on the market and days on market is a killer of home value. If a buyer knows the home has been on the market for too long they think they can get a deal.
The conversation we have with a seller in this situation in advance is if we don’t catch a buyer at the high price and our experience tells us we aren’t getting the number of showings necessary to get the home sold at that price we want to listen to the market.
Where things go wrong is at this point the seller is worried if the price is reduced they will appear desperate. The seller mistakenly believes if a buyer is interested they will make an offer at a lower price. The seller will tell me they will accept a lower offer but are afraid to lower the price. For example, if a home should be priced at $500,000 but is on the market for $525,000 the seller will say they will accept $500,000 but not lower the price. This is the equivalent of a store having an unadvertised sale.
Market research and our experience tells us when a home is priced too high many buyers may not even know about the home being on the market or if they do, they don’t want to waste their time making a lower offer and they are afraid of insulting the seller. At this point the buyers who are not bashful about making an offer are usually the buyers who want to make a low-ball offer.
Here is a recent story with a fortunate happy ending that shows what often happens in this situation. A home was on the market for $525,000. Based on all the feedback we were getting we recommended the sellers should reduce the price to $500,000. The sellers were afraid to reduce the price but were starting to get antsy about getting the home sold.
The sellers decided they needed to sell asap and went forward with accepting the $470,000 offer. I. wasn’t happy but we work for our clients and have to do what they want.
As often happens if you accept a low-ball offer the buyer gets greedy. Suddenly the buyer felt he was paying too much and tried to renegotiate the contract down to $440,000!
Once again I told the sellers this was a mistake. I recommended we encourage the buyer to cancel the contract, make a price correction and get a better buyer. This time the sellers listened to my advice. The buyer cancelled the contract and we reduced the price to $500,000.
What happened next is we got a full price offer at $500,000 and the buyers were great throughout the transaction making it a stress-free sale for the sellers.
The moral of the story is being afraid of low-ball offers can attract low-ball offers. Pricing a home can be tricky and the best thing you can do when selling your home is have a Broker working for you to come up with the right strategy for your situation. Whenever you are ready for a confidential talk about your home call me on my mobile number at 512-791-7473 or email firstname.lastname@example.org.