Sellers still unrealistic about asking prices
Monday, November 20, 2006
Sellers who aren't happy with the first offer they receive are often inclined to refuse it and wait to see if something better comes along. However, some sellers are finding out the hard way that the first offer was their best offer.
A Piedmont, Calif., homeowner listed his home for sale this summer at a price that he'd hoped would generate multiple offers and a higher price. Not long after the house went on the market, a buyer made an offer for over the list price. However, although it was a good price, the seller wanted even more. So, he issued a counteroffer for an even higher price. The buyer rejected the counteroffer and bought a different property.
The seller then increased his list price to a price he would be willing to accept. The property sat on the market for weeks with no offers. Finally, the seller lowered the price to his original asking price. This action did generate two offers, both for less than the asking price. He accepted the better of the two offers. However, he ended up selling for far less than the amount of his first offer.
A year ago, many sellers listed for an under-market price that resulted in a successful sale for more money. There was a limited inventory of homes for sale and a lot of buyers who were anxious to buy.
Now, buyers have more to choose from and can afford to be discerning. Sellers, on the other hand, need to carefully consider every offer even if they think the price is low.
It's difficult for most sellers to accept an offer for less than they want if the offer is made soon after the listing is marketed. The natural inclination is to think that more exposure will bring buyers who will pay more. This is always possible.
However, serious buyers who've searched for a considerable time usually come forward with an offer as soon as the right property comes along. These buyers tend to know local market values well. They are motivated to buy and will often make their best offer -- or close to it -- initially.
HOME SELLER TIP: Make sure you carefully evaluate the merits of an offer that is presented soon after your home hits the market. Ask your listing agent to give you feedback about your list price and the local market conditions. How many homes like yours are currently on the market? Have any sold within the last few weeks? How do the list prices of these properties compare to yours? Is there serious interest from any other buyers?
In the above example, the seller's mistake was to expect too much for his house. This is a common mistake sellers make in today's market. Unfortunately, misreading the market costs time and money.
In order to be a successful seller, particularly in the current market, you need to divorce yourself emotionally from your home and look at it objectively. Ask yourself if you would pay the price you're asking a buyer to pay. Try to put yourself in the buyer's shoes.
Another Piedmont homeowner put his home on the market at the end of July. Several similar listings came on the market the same week. The listing agent planned to hold two open houses before the seller listened to offers.
However, several days after the first open house, an offer was written. The buyers were the very first people to look at the house. The seller had been hoping for multiple offers and a higher price. But, he accepted the buyers' asking-price offer. The deal closed in 30 days.
THE CLOSING: The other listings that came on the market at the same time in the above example sold one to two months later only after price reductions.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.