The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth
The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.
Everybody wants a deal…
Advice for Buyers: In this Buyers’ Market everybody is looking for a deal… It makes no difference what neighborhood or price range… everybody wants a deal!
So here’s the deal: Homes will always sell at market value. Market value is determined by what a buyer is willing to pay.
You… the buyer… are the market.
As previously stated here, the value of a home has nothing to do with what the owner paid for it, has invested in it, needs for it or any of those other common justifications made for why they are convinced that it will sell for more than market value.
Market value varies based on the buyer population and desires. It is not a fixed, rigid price, but instead is a range of value. This is because no two buyers are alike. While one must have a pool, another will consider a pool a liability. What one buyer loves turns the next buyer off.
“Low-ball” offers are becoming the norm of the day. The term low-ball is generally defined as the deliberate underestimation of cost or value… or in other terms an offer significantly below the seller’s asking price. However, low-ball offers are not always the best path to getting a great deal.
Negotiating the offer…
Unless your goal is to accumulate a stack of rejected offers you will one day share with your grand-children, it is important to remember that you are offering to purchase a home. A home, unlike a bushel of corn, a pound of beef, or a ton of sand, is inherently emotional.
So, it is helpful to keep in mind a few dos and don’ts when creating and presenting your offer:
Do know the seller’s circumstances. Obviously, knowing the seller’s circumstances will not always be possible. However, it doesn’t hurt to ask about those circumstances before considering your offer. It’s truly surprising what you (or your agent) can learn by simply asking a few questions. Does the seller simply “want” to move or do they “need” to move? Is there a real driving motivation, or is he just thinking of moving to the beach if he can get “his” price? Circumstances will dictate whether there is a bargain on the horizon, and knowing this in advance can save everyone time and frustration.
Do get personal. Presentation of the offer can be a key to successful negotiation. Putting a personal face on the offer can make a seller consider your offer in a totally different light. For that reason, I suggest writing a cover letter to be submitted with your offer (or even better presented by your agent) that tells the seller why you believe this is the right home for you.
I have seen sellers accept a lower offer because they felt a connection with the buyer. Does the seller have a cat? It might not hurt to mention that your own Angel will just love this new home, as well. The seller raised his children in the home? Why not mention how much your children will enjoy having their own space? It may not help, but it can’t hurt.
Don’t offend. Unless you are making an offer on a property that has been held purely for investment (this includes foreclosures and short-sales), the seller is emotionally invested in his property. Negative comments (regardless of their accuracy) of the seller’s home are not a winning strategy. Even in this market, negative statements about the property whether spoken or written into the offer can arouse the emotions of the seller creating a negative response.
Don’t criticize the seller’s price. Your agent has given you information on comparable property sales. Sharing your mountain of information and a 50 page CMA (Competitive Market Analysis) will not endear you or your offer to the seller. Your offer speaks for itself. The seller has set a price, probably after having taken this same information into consideration. You may believe his price to be high, but it is his price. Insulting his intelligence or sense of reality further will not further your cause.
Don’t defend your offer the wrong way. Saying it is all you can afford or that you are basing it on what you believe values will be during the next quarter century. Such explanations of your offer will likely leave the seller feeling that there is a buyer out there, other than you, who can afford his home and at the price it is worth today.
Don’t be unreasonable. There are offers, and then there is the “what’s he smoking” offer. If a home is offered for $X, and you are willing to pay 10% less, do not offer X minus 20% and then ask the seller to throw in the bedroom furniture, refrigerator and ski boat. You will not be taken seriously. Is this already the lowest priced home in the neighborhood? Is it already a good deal?
Do be prepared to negotiate. No buyer wants to think they paid too much, and no seller wants to think he sold out to cheap. Expect to go a round or two. “Take it or leave it!” offers are rarely met with smiles or high-fives from the seller, even in this market. In negotiations, everyone wants to feel like they were in control and that they prevailed. Work toward a win-win feeling through out the process to achieve the best result.
The market is filled with great opportunities for the buyer. Great values… Values relative to prices a year or two ago are common. But, ridiculously great “deals” are needles in the proverbial haystack. Because market value will always be determined by what a buyer is willing to pay. That buyer might be you, but if you are unrealistic or even simply careless with creating and presenting your offer, it will probably be someone else.
It is a great market… for the buyer who is looking for great value but who also is willing to work the offer process in a manner that lets the seller feel like a winner too.
May the Market be with you.
