Before I get stated I want to admit I have a real estate problem! I spend 8-10 hours most days working as a Realtor and when I come home I’m either reading real estate magazines, researching how to get more traffic to my website or writing blog posts, all of course after I play with Mackenzie and put her to bed. For downtime I love yard work or build things and I watch HGTV, love watching the shows where the agents list and sell homes in different parts of the country.
Last night there was a show where a young couple owned a 1 bedroom two story townhome just under 1,000 sqft. They hired an agent Sean who ran some comps and gave them a vale of $182-$182,500 as a selling range. They listed the home for $189,900 and within a short time received an offer for $175,000.
After going over the offer it was the seller who asked if a counter offer would be appropriate! The agent who should have been looking out for his clients hesitated, saying “You can but you run the risk of loosing the buyer” One thing I’ve learned over the past 13 years in this business is when a buyer makes an offer on a home they are emotionally attached to the property! Also, 80% of buyer’s who make an offer, make a low offer to see how the seller is going to react.
If the seller is confident in their asking price and they have good comparable sales to back it up, my advice would be to counter at almost full price or at the top end of the comps, expecting the buyer to then make a counter. This is part of the negotiating, if you don’t do this either part may feel like they have lost something.
Buyer & sellers don’t typically want to take advantage of the other part, they just want to now they got the best deal they can get. At the end of the day paying $5-$10,000 more for a home in the long run is such a small number added to the monthly payment. (Rule of thumb if you pay $5k you borrow your mortgage will go up $25 depending on the interest rate.
The seller’s agent didn’t seem confident in the price or negotiating and it almost seemed to me he may have been more concerned about making the deal happen than providing the seller with sound advice.
The main reasons people hire real estate agents is because they want someone with knowledge and experience to advise them on the best cause of action when buying or selling a home. They also need marketing to expose their home to all potential buyers. Emotions run high when buying, selling and negotiating. I think everyone would agree they don’t like buying a new car, because you have to dealing with a trained sales person who knows what buttons to push to get you to pay more for a car.
Real estate agents should remain unemotional! (I do say, should) The advice given on this show last night was to make a counter offer, splitting the difference from the buyers offer and the asking price which was $182k was in my opinion this was bad advice because the sellers wanted to get $182k. The obvious next move from the buyers would be to then split the difference again. Which is what happened, the buyers made a counter of $179,000 the sellers were then under pressure because they didn’t want to loose the buyer. Their agent suggested a counter of $179,750 (who comes up with a counter for $750 more?). They made a counter and the buyer accepted. The seller effetely sold the home under the comps by almost $3,000 which for these guys was a lot of money.
The other big issue was the home inspection, the seller knew the heating system was making a strange noise when they listed the home. Asking questions at the time the listing was taken could have saved the seller over $1,700 for a new heater. If they would have purchased a home warranty for a little as $400 they would have been protected. But the sellers ended up having to buy a new heating system for the buyers.
The conclusion to this is when hiring a real estate agent find someone who has been in the business for sometime in your area, someone who knows how to negotiate and is confident in your asking price. Don’t overprice your home in today’s market buyers have access to all kinds of data from the property appraiser office, zillow.com, cyberhomes.com and the sold data from the MLS.
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