I Just Listed
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The information in this article is a purely a hypothetical situation, not based on any particular transaction. However, having said that, this situation happens repeatedly in the business of real estate, the business of buying and selling houses. This situation has happened to nearly every REALTOR® practicing real estate. Variations have even been documented on television series on HGTV and other real estate related television and radio programs and stations all over North America. Perhaps in other countries as well.
Our experience tells us and shows us, in particular, that people who have lived in their homes for a long time, some of whom even held a real estate license at some point in their lives, are victims of misinformation. Not their fault. They have just not stayed current with the appropriate market information in most cases, and in other cases have looked to neighbors or family members for additional advice, even though they have hired a REALTOR® to do the job. The real estate business has changed so much in recent years, even the professionals have great difficulty digesting all the current changes.
But some things never change. You should never feel pressured into doing anything, particularly anything you feel uncomfortable doing. Having said that, your REALTOR® should be one you can trust implicitly to guide you into making right decisions. But always know that your REALTOR® cannot make any actual decision for you. If you turn away a logical offer with the hope of getting a better one down the road, please do not blame your REALTOR® especially if the market changes and you end up selling for less than your initially desired price. There are abundant stories of offers that were not accepted, in changing markets. Markets go up and markets go down. Same story applies to all buying and selling. Buy low, sell high. Timing is everything, and no one has a crystal ball. Consider every and any offer better than no offer. Work with an offer until you have exhausted all possibilities of putting that transaction together. Yes it can be frustrating. For all concerned. But the goal still remains the same: to get for you the highest and best price that the market will bear, in the shortest time possible, with the least amount of aggravation, and letting everyone feel like a winner in the end. It all starts with the right asking price, right for whatever the current market dictates.
"There will be other offers," you say. "I'm in no rush to look at this offer."
Your REALTOR® has worked so hard, right away, to get your home promoted out in the public eye, along with promoting it to his/her colleagues, knowing that a new listing attracts its best attention while it is brand new to the all systems; there will be sign calls, new MLS calls, agents requesting appointments, possible Buyers who call having taken a feature sheet from the sign box, myriad possibilities - all with the hope of generating a fast, acceptable, sale for you.
When you interviewed your agent, one of the hopes you expressed was that you would get a reasonable price, "as quickly as possible, even though you are not in any hurry." Now it looks like that might happen - and happen very quickly. And now you are scared, (what if? what if?) and you are feeling pressured. You say that, after all, it is "only" the first offer. Why should you even consider it. You can just send them away and that will put a fast end to all this rushing around, you say to yourself. No one is going to steal your house.
Why do sellers put themselves through these hoops? It is no fun having your home on the open market, with strangers visiting with little or no notice, sometimes booking appointments and then not even showing up for the appointment (and no one even called to cancel). They even made you leave your home at dinnertime, and then they didn't show up? How aggravating is this? And how often is this going to happen?
You now have an offer on the table, within only a few days of having listed your home for sale (and you told your friends and neighbors that an offer was coming "already" and they, trying to be helpful, said you must have listed your house at too low a price if you are getting an offer that fast). This offer, with some negotiation would or could become an acceptable sale for you, albeit sometimes with conditions or contingencies such as the sale of a Buyer's property, or a building inspection, or some other situation needing taking care of.
The price is almost where you want it to be, but not quite. However, you decide, since all this rushing about has produced an offer in such a whole big hurry, that must mean there are more buyers out there, too - you are feeling put under pressure. You remind your REALTOR® that you told him or her that you "don't have to sell," and you think maybe you should just sit back and wait for another offer, rather than try to negotiate this one. Too much stress. You can't think straight. You say, "Why doesn't the Buyer just come to the table with the best offer the first time around?" "Why all this running back and forth, and in the middle of the night, no less?"
Let's use a pricing example: Your home is listed at $349,000. All the comparables indicate that your asking price likely should have been in the $325,000. range. But you wanted to try for a higher price because you had your own ideas about where the price should be. No, you have no support for your idea, other than your own personal thoughts, and tell your REALTOR® that twenty years ago you, yourself, actually were in the real estate business so you know how it all works, anyhow (or you have a friend or relative in the business and they are giving you advice on the side).
Now this first offer has come in at $330,000. You have long since forgotten about the comparable sale prices at $325,000. indicated by the comparables as a logical asking price. You feel no joy at knowing a Buyer already thinks your property is worth $5,000. more than those other sales in your subdivision. You feel that there must be some reason those other houses sold for that low price, and you just know that yours is better and nicer and that someone will come along, eventually, who will recognize this and agree with your opinions and appreciate your fine home. Your REALTOR® is hoping against hope that he/she is wrong and that you are right. Just this once, let the Seller be right. I would be so happy for him, if the marketplace produced an overly high offer the first time out.
Your sales representative is ecstatic when the file is opened and reveals an offer at $330,000. but tries hard not to get too excited, wondering and waiting for what you will do and say. Your first comment is that $330,000. is nineteen thousand dollars below your asking price. And you remind your sales rep that you had initially been thinking of asking even more than the $349,000. listing price, but that the REALTOR® had convinced you (bullied you, you are now thinking) that your price would be way out of line if you did so, and agreed to try to find a Buyer for your property, agreeing to list at $349,000. to test the market.
No home in your area has sold above $325,000. But agreeably, your home is super sharp and that will be appreciated by a Buyer, no doubt about that. But the magic will be in getting your asking price or close to it. Now much to your REALTOR® 's surprise, on the table is an offer $5,000 higher than other local sales. What to do. What to do. Should you split the difference, and you would then receive $340,000. for your home, if the Buyer did not disagree with your counter offer, or counter back?
No, you say, because that would still leave you nine thousand dollars less than the asking price. So you decide to only adjust the offer by coming down two thousand dollars less than your asking price. You counter at $347,000.
The Buyer counters your offer back to you at $335,000. firm and final. He has come up $5,000. more than his initial offer. Now you are ten thousand dollars higher than other local sale prices. Now you are feeling pressured; you wish your REALTOR® would not have put you in this position; surely it must be the fault of the REALTOR® . This is all happening way too fast. Your home has only been on the market for a few days and you have had lots of traffic already, even while this offer is being negotiated. Surely someone else will pay more and you won't have to go through all this ugly negotiating process. You want a Buyer who is reasonable, after all. One who respects your own personal knowledge of the asking price reality. Why don't REALTORS® "get it?" Sellers don't want this pressure, you are thinking.
Your REALTOR® calmly points out that there are no conditions or contingencies in this offer and the moving date is acceptable to you. You counter again, even though your REALTOR® has expressed concern and has shared information with you that you may lose this particular Buyer. But you don't take this into consideration at all, and your head tells you this is just idle salesman talk. This time you counter at $345,000. Three days have passed already in the negotiations. You've now come down $4,000. below your asking price, and you are "not" a happy Seller.
The Buyer walks. He does not come back to negotiate further. When you get the phone call saying the offer is dead, you scratch your head and wonder aloud - but why would they not continue to negotiate, at least. But you decide this is fine and you will wait and see what will happen in the next few days (surely there will be more offers and better ones than this right away, since everything seems to be happening in a big rush, or even in a few weeks down the road, you are certain a better offer will appear. You have wasted the past three days negotiating with a Buyer who just does not appreciate your fine home, you tell yourself; and just look at all the pressure your REALTOR® has put on you - waiting up late at night for answers that never materialized. Now this.
Several open houses later and with the season changing from autumn to winter, pictures that were once current as to the weather are now out of date and new ones must be taken and the whole promotion campaign started all over again - you have had numerous viewings but no further offers. Your agent has been working very hard, and you do recognize that. You, too, have been working very hard - vacuuming before each viewing, putting out fresh towels, making sure someone walks the dog at each viewing, generally inconveniencing all the family members, and then there are those no-show appointments that prevented you from preparing dinner on time.
You are beginning to recognize that the advice your REALTOR® gave you was good advice when you were told that most often your first offer (even if it has to be negotiated into a slightly better dollar value), is usually your best offer (and sometimes your only offer). You could have been in your new home by now. Nasty situation all 'round. But sure enough, you now do receive another offer. Many weeks have passed and you surely hope this offer starts off at a higher price than the previous one did.
You open the file to reveal an offer price of $320,000 and the offer has several conditions, the most important one being for a building inspection.
You conveniently failed to mention to the REALTOR® that there had been a crack in the basement a few years ago, and now with snow on the ground and a recent week of melting weather, there is now a leak in the basement again. You are fearful what the repair costs will be and that the Buyer may want a further adjustment if the building inspection reveals that crack and any other problems you may not even know about. Such pressure, again.
How you wish you had accepted the firm and final offer at $335,000 several months ago. You would have sold $10,000. higher than all your neighbors. You had a house in mind that you wished to buy back then, but didn't want to make an offer on it until yours was sold, so now someone else bought that one. You have managed to locate a replacement purchase that you are going to have to pay more for than you prefer in order to acquire it. And you want your Buyer to make up that difference. What should you do? The market has changed in your part of town, and several local homes in your area now have sold for $320,000. Down slightly in price. Obviously this Buyer has done some homework of his own.
All the stress could have been eliminated from the get-go, had you negotiated your first offer into an acceptable price for you and for the Buyer. It is very difficult most times to get a Buyer to sign on the dotted line, and most Buyers today are educated as to current market value. They usually do their own homework well ahead of making an offer.
The old adage that any house is only worth the price that a willing Buyer will pay to a willing Seller when neither is under duress and the property is properly marketed is the definition of market value - used by banks' appraisers as well as the real estate community in general. Sellers often don't take into consideration that the house the Buyer is offering on must pass a qualifications test, same as the Buyer himself must. Time and time again, Sellers end up being on the short end of the stick several weeks or months later, so to speak, because they did not accept, or at least negotiate, the first offer made on their property.
You, as a Seller should never feel pressured to accept an offer. And you should never feel pressured because you get an offer promptly after placing your home on the market. If anything, you should feel blessed to have the whole process over and done with promptly; particularly if you are in a changing market where there is a possibility of prices, rather than escalating actually take a downturn.
Anyone who has ever sold a house knows the stress that can occur during the timeframe it takes to sell. No one is suggesting you should give away your house. In particular, Carolyne has a reputation of getting very good prices for her Sellers. But sometimes Sellers can get frightened by brisk activity that happens quickly and especially so if the activity produces a really good offer, quickly.
It is part of the skill set of your REALTOR® to be able to reassure you that you are doing the right thing by accepting the first offer you get, even if it happens very quickly. It is not so, that your REALTOR® should try to force you to do so. He or she does not own your home, and typically is not buying it, either. Your REALTOR® wears many hats. There is so much more to the real estate industry than putting up a for sale sign, turning it to read SOLD and collecting a paycheck. Strong negotiating skills are a must. An agent who offers up front to cut commission, will give away your sale price offer benefits even quicker. If he cannot negotiate his own paycheck, how will he ever be able to negotiate the best price for you, whether you are the Seller or the Buyer? When an offer does appear, it is always worth trying to negotiate to a point where everyone involved is pleased in the end. Everyone should feel like a winner when all is said and done. Fairness must prevail on all sides in order to consummate a transaction.
Please read the other related articles on our web site so you can learn how the real estate business operates in a genuine fashion, trying to do the best for all concerned. Most REALTORS® are honest and hard-working individuals. Trust is everything, but trust can be nothing in the end, if everyone cannot agree.
NOTE: this material is copyright Carolyne Realty Corp. and may not be reprinted or duplicated in any form without the written consent of the copyright holder. All rights reserved.
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