Stacey has come up with a comprehensive blog about buyers and sellers in a market and has described what may happen during the offer period on the sale of a home very well.
Each person, buyer or seller have goals on what they want to get out of the transaction. Sellers obviously want a full price offer as they discussed with their Realtor what they want to come away with at the closing table.
Very rarely will buyers offer full price for a listing and they will most likely ask for either repairs or perhaps a home warranty. When they do offer full price, a lot of the time they are asking sellers to contribute to their closing costs, (here in Guadalupe County Texas anyway, each state and Real Estate Market is different), which means they are still asking for the seller to take away from their bottom line.
Each must remember that it isn't a personal attack against the other. Real Estate can be an emotional time for everybody and it is up to your Realtor to keep everybody and the transaction in perspective.
Would It Offend The Seller If the Buyers Offered Less Than Full Price?
Not necessarily. That’s right, I said it out loud. In the end buyers and sellers are simply people who have goals that they want to meet in a real estate transaction. The seller wants to sell their house for the price they’ve listed it for – for whatever reason. The buyer wants to get a good deal on a house , and sometimes a good deal is defined as getting it for less than it is listed for. Sometimes it’s even paying asking price because it meets their needs. Everyone comes from their own perspective, which is fair.
Everything that all of us in the transaction does is geared towards attracting, then connecting a buyer to a property.
As real estate agents, we are trained to be professional and not stoke emotional fires that may be counterproductive to the negotiations. We keep the conversation focused on terms of the offer.
From the seller’s point of view:
When an offer comes in that is less than asking price, what are some of the reactions that you can expect the seller to have?
Anger–They are confident that they had it priced right, and along comes a buyer who doesn’t see the value of their home. Plus, they feel their price was fair, and is what the house is actually worth with all of the upgrades and maintenance they’ve done.
Shocked – That the offer price is lower than they expected.
Offended –This buyer is trying to take advantage of them and get a bargain at their expense. Not every real estate market is as bad as the national news makes it seem.
From the buyer’s point of view:
Excited – They found a home that they would love to buy.
Anxious- They always ask, “What will the seller think of my offer?” I hope they will accept it, or that we can come to an agreement.
Scared- That they may over pay. Or, that they may be able to get it for less than the seller is asking - and by not asking - that they may be paying too much. It would be easier to pay full price, or close - if they could justify it, but they think it’s priced too high.
Overwhelmed- Getting advice from every corner – parents, friends, co-workers, their agent. Who should they listen to when they have their own ideas about what to do? Don’t want any “I told you so” statements.
The List/Asking Price
As agents, we know that when a house comes onto the market that is priced very well, that it will sell fast. Depending on the market, fast may be hours, 1 week or 1 month. On the other hand, when we list a home that may be priced at what we feel is market value, or at the top of the market –it may not sell “fast”. We tell the seller that we will monitor showings and agent/buyer feedback. If it doesn’t sell “fast”, price is most likely the issue. It needs to be reduced if they want it to attract a buyer. Buyers know value when they see it. They’ve been looking at similarly priced properties in their price range, and are current market experts at that particular time because they are immersed in the details of these homes. If they see a home that is an excellent value, they will not want to lose it. With so much information and market data available to buyers, including from their Buyer’s Agent, they are smart enough to know what they feel is a good value. Even if they think the house is priced right, their negotiating personality may be to offer less – just because. They may not care that there are granite countertops, or beautifully tiled floors at this point. Or, maybe they do care and simply just don’t want to pay the price. Keep in mind that their buyer’s agent has advised them of the risk of coming in lower than list price. They decided to take the chance anyway. They may be disappointed if the seller is offended and outright rejects the offer. That’s the risk that the buyer took. But the seller also has the option to respond to the offer with a counter-offer that reflects terms that are acceptable to them.
In a Real Estate Transaction, the Buyer is King or Queen
Ultimately, in the real estate transaction, the buyer is the most important party. Everything that the all of us in the transaction does is geared towards attracting, then connecting a buyer to a property. The seller doesn’t reach their goal without a buyer who is willing to pay a price for their home. The buyers in our market set market value. We know that the pure definition of market value is determined by what price a ready, willing and able buyer will pay for a home. If a buyer is willing to pay $100,000 for a house that is listed for $500,000 – the true market value at that time is $100,000. No matter how many upgrades, how well the home has been maintained, or that the owner/agent thinks that it is priced perfectly, the market/homebuyers will tell us for sure.
Remember, the seller always has the option to reject any offer if it doesn’t meet their needs. They could keep the house on the market for weeks, months or years while they wait for the buyer who is willing to pay their price to come along. It very well may happen. So, if their negotiating style is to stick with their price, all or nothing - then buyers shouldn’t be surprised if their lower than list price offer is rejected. They should be prepared to either pay full price, or find another house to fall in love with.
It is easy to see how emotions may come into play with a buyer who really wants a home and doesn’t want to offer list price, and a seller who wants to sell for their price (or close). It doesn’t always work out. The benefit of having professional agents to guide the buyers and sellers through the negotiations is that if it doesn’t work out, both sides are able to move on, hopefully recognizing that it was simply a matter of differing opinions and objectives.
Brenda Mullen – San Antonio Texas Real Estate Professional
Subcribe by clicking the Sponge!!
Follow Me at These Cool Places
Broker-Associate/Realtor®, ALHS®, MRP®, ABR®, ePro®
Team Leader The Mullen Group with RE/MAX Access - Helping You Find Home
19115 FM 2252 STE 15