The First Offer You Get...
Recently I had a transaction where after due consultation the seller agreed to list the home at the price which I suggested. I arrived at this price by doing a in depth analysis of the current activity within a half mile of the subject property.
In attempting to arrive at the best possible price point (the point at which someone would offer on the home) I looked at the most recent sales of similar properties including those which were in escrow, but had not yet closed. And, at the active listings (those currently on the market but not yet sold).
I look at the recent sales for obvious reasons. These are the homes which had completed the sales process. By studying these properties, I can see where they were priced when listed, how long they were on the market. And, what the final sales price was.
All of this is vital information when determining where to price your listing. If a home is on the market for a protracted period of time without selling, it most likely will sell for less than it would if the home were properly priced in the first place.
Real estate professionals call this process chasing the market. You list high (hoping to get a high offer) then you begin the process of adjusting the list price down over a period of time until you get an offer.
The problem with this method of marketing is that most of the activity you are ever going to get on a listing happens in the first six weeks, after that the listing becomes stale, and usually will require a more substantial price reduction to stimulate activity in the listing again.
I look at the pending sales for the same reason. By examining transactions in escrow, I get to determine what they were originally priced at and, how long they were on market. What I do not get to know is what they sold for because this is usually protected information until escrow closes.
Finally I look at the new (or active) listings. This tells me a couple of things. One thing it tells us is where the market is trying to go. For example, are the listing prices going up or down? How long at this sales point are they on market before they get an offer? Or, how much do they have to reduce (and how quickly) before they start to show activity?
So, now back to my story, I took a listing and as I said determined a good list price to place the house as the home to buy if you were purchasing in that price range. And, within a week we had our full price offer.
Unfortunately, the sellers decided that was an indication that we had priced too low and rejected the offer and upped the price by twenty thousand dollars. And it sat, and sat, and sat. So, we reduced the price by ten thousand and again it sat.
Finally, we reduced the price back to the original list price. And, right away we got an offer nineteen thousand below list. We countered and we negotiated until we were able to get the buyers to pay nine thousand under asking.
The sellers lost nine thousand when comparing the offers along with a lot of time. I tell you this story (and I could have told you a hundred more just like it) to illustrate the need for you to trust the REALTOR® you hire. And, more to the point hire a REALTOR® you can trust.
It is a fact that in a flat or down market the first offer you receive may in fact be the best offer you receive. And, to dismiss any offer without proper negotiation could cost you thousands of dollars.
In this market, it is imperative that you properly position your home to sell. Amenities which traditionally add value to the property in this market simply ad incentive to potential buyers to purchase your home.
So, listen closely to the advice you receive from your REALTOR®. Examine the reasoning behind their valuations. And, recognize that in a market that is strongly favoring buyers, if your home sells quickly, your REALTOR® got it right.