Part of a realtor’s job is to help manage expectations – not only those of their own clients, but expectations of the other agents and their clients too.
Recently I received an offer on a listing that was 25% under the list price. They also wanted my seller to carry the financing for 30 years – which is unheard of – and oh yeah, it was contingent upon the sale of the buyers’ home too.
I told the agent (whose email-signature noted they were in the Top 10 statewide for their company) that if I was the seller and that offer was presented, I’d fire my agent.
Just like when we’ve seen a home with range-pricing that is too wide, it becomes impossible to bridge the gap – for three reasons:
- Once a buyer puts a number on paper, their mind starts believing it’s real.
- Buyer’s remorse is real too, and they cool off quickly.
- Sellers are skeptical, and don’t feel like negotiating much.
It may be discussed as just a place to start, but once a buyer submits their price in writing, it becomes a comfortable number. Going much higher than where they start is usually a function of how fast agents respond. My rule-of-thumb is two counters max for each side, in less than four days.
In this case, my sellers weren’t desperate, they had already determined that they wanted to sell for at least 93% of list and were willing to wait for it. I told the buyer’s agent that our price gap was too big, and I nicely asked the agent and buyers to go back to the drawing board.
Three days later, I received a new offer with bank financing, instead of seller-carry, but it still had the original price of 25% under list. It came with the buyers’ love letter; a full-page of reasons why my listing was the perfect fit for the buyers.
Was the love going to make the looming price gap surmountable?
In spite of houses around the county selling for 99% of list this year, we countered with a price that is 4% under our list – not bad, considering the original offer price. On their counter, the buyers came up to 82% of list, but it took two days to arrive. I knew the remaining price gap and time left wasn’t looking good.
I always want to respond promptly, because of #2 above – buyers cool off quickly. We dropped another 2% within a few hours, but it wasn’t enough. Two days later, the agent emailed that they lost interest – no counter, no love.
Five days gone by (seven days since the original offer), and the initial 25% gap killed our chances. They knew before writing the offer that it would take at least 93% of list to buy the property, and they still offered – so initially there was some willingness to pay that or close.
If they would have started at 82% of list, and trimmed the time spent to 3-4 days, could we have made it to escrow? I think so!