I pride myself on being able to research and provide evidence (comps) showing why my clients are offering what they are offering when it comes to buying a home. But not even the facts could persuade this seller. The following story is a true account of a recent situation I had with presenting an offer to purchase. I can not give out too many specifics in terms of town, price or names for that matter, but the following account was and still is unnerving to me for different reasons. Let me explain:
For some time now, I’ve been showing houses to a young couple (Eager Buyers) qualified to purchase up to $315,000 with 10% down. We focused on houses in the $265, 000 to $330,000 range, and even went as high as $340,000. Unfortunately, after many attempts and houses I showed, did not completely satisfied the clients.
I explained to Mr. and Mrs. Eager Buyer that it was possible that there are properties in the wrong price range and we should take a look at a couple of others, specifically 123 Main Street. I had seen 123 Main Street before with another client and found that it matched the wants and needs of Mr. And Mrs Eager Buyer better than the first couple I had shown the house to.
After showing 123 Main Street, which was listed for $345,000, the couple was thrilled, but spoke plainly to me and said that even after looking at other home sin the same town, they felt the price of 123 Main Street was overpriced. At Weichert, Realtors, we are believe that any offer is a good offer. So, I wrote up what they wanted to present, but with it I looked for comparable sales within 1-2 mile radius of the home and found 6 that took place within the past 4 months (most appraisers are only going back 3 months), but I went to 4 months so that I would not miss anything. I found that the average sales price in that 1-2 mile radius was $305,000 with only one home selling as high as $315,000. 3 homes sold for $295,000. One for $305, 000. Another for $300,000 and one for $315,000. I suspected that I would have a hard time persuading the seller that a $290, 000 offer was good given the market, but with my 6 closed sales, I thought I would be able to come to terms, somewhere in the middle.
I was sadly mistaken. When I presented $290,000, I was countered at $330,000 FIRM. I asked the seller’s Realtor to show me comparable sales that would justify or even command a higher price. The seller’s agent said that first, the houses I was using was in a different school district and second, he had no concerns over the house appraising at $330,000 even though I showed him that 6 houses sold for significantly less than what the seller wanted for his home.
I then went on to the MLS and looked at all of the sales that took place in the town at the $325,000 to $330,000 range regardless of bedrooms and bathrooms. What I found on the $325-$330k list was that these properties were larger and on a different size of town, which means they would not meet the 1-2 mile radius marker.
What frustrates me about the situation is that I did the math, I did the work and even though my client even came up in price, the seller would not budge on his FIRM price. I asked the Realtor if the owner was in a short sale position, and the Realtor confirmed that the seller was not.
In this market, I am 100% certain that your pricing strategy is the first piece of your marketing plan.
In all actuality, my clients would have never seen the home since we search for properties as high as $325,000 and the one we bidded on was priced at $345,000. If you are in the wrong price range, you are less likely to sell because clients will:
- In some cases, clients may not bid at all knowing they are bidding so much less, which could be preceived as offensive or they may not want to bid because they know the market themselves and feel that the house is overpriced.
- Bid even lower just so that they can show they came up in price.
By inadvertently or purposfully pricing your house too aggressively or above the market, buyers sometimes offer even less because they perceive or think you to be desperate. Buyers will rationalize to themselves you must be are willing to negotiate if you are still on the X market. The number one questions of all buyers when it comes to making an offer on a home for sale is: How long has this house been on the market?
In conclusion, despite my best efforts, this seller was not persuaded by the facts. It’s unfortunate, but this seller is likely to lose out on several buyers and depending on what direction the market takes in the next few months, he could be depreciating in value.
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