Selling a home…not just a house…is an emotional thing. So, even when your agent tells you that you just received a $300,000 offer on your home when it’s listed at $305,000, you start to wonder if you should counter the buyer’s price. It’s a natural reaction. To help you through the next 12 or 24 hours you have to respond to the buyer’s offer, here are some tips to consider when your gut is telling you to counter back at your full list price:
1. How long has your home been on the market?
The longer a home sits on the market, the lower the price of the offers you typically receive. Buyers perceive homes that have been on the market for a long time as problem houses. They wonder, “What’s wrong with the house and why hasn’t it sold yet?”
2. What kind of a real estate market are you in?
Buyers naturally want to pay under full-price for a home in a declining or speculative real estate market. They want to “hedge” the housing market by paying less than the house is worth today in case it’s worth even less tomorrow. This means waiting for another buyer in a declining market could mean an even lower offer price the next time…if you get a next time.
3. If you counter back to the buyer, will your house appraise for that price?
Right now, because of the banking and housing crisis our country has been facing, appraisers are being very careful not to appraise homes for more than they’re worth in the current market. If the home does not appraise at your higher price, then you and the buyer will be back at square one, because the buyer’s bank will only lend what it appraised for. Nothing more. You could ask the buyer to pay the difference between what the home appraised for and the sales price in cash, but most buyers are reluctant to do that. Think back on your own home buying experiences, and put yourself in the buyer’s shoes for a moment. How often have you been willing to pay above a home’s appraised value?
4. How long will it take to find another buyer?
This is a question that even your agent won’t know the answer to. Finding another buyer who’s qualified with a mortgage company to buy your home at your full list price could take time. And time is money. Consider carefully how much you spend every month in carrying costs to maintain the home and pay the mortgage. By the time you find a new and eligible buyer, you could have spent more in carrying costs than the difference between your last buyer’s offer and the full list price!
5. The first offer is usually the best offer.
I know it’s a cliché, but I see it a lot. It’s not ALWAYS true, but usually it is true. And when it is true, sellers often wish they had taken their first offer. Statistically, the longer a house stays on the market, the less it will sell for. In other words, time is not on your side in a stagnant or declining real estate market. You take a gamble when you counter back to a buyer. Choose wisely.
Now, I know you want to get as much as you can for your home. That’s natural. Your real estate agent wants you to get as much for your home as you can, too! But, the agent who asks you to consider these issues has your best interests at heart. So consider your next step carefully, and move on to your next adventure!
**SPECIAL OFFER: If you live in the Greater Phoenix Area, and would like to know how long the average home in your city or zip code has been on the market, or what percentage of list price the average seller in your city or zip code accepts, I have the graph you need to see. Contact me here, and I will email this graph to you for free.**