Bidding wars provide several advantages to home sellers, centering around the additional leverage they enjoy during the negotiations.
But not every seller gets to experience the thrill.
How about those sellers who aren’t receiving any offers? First, decide if you want to sell, or not sell today. If you don’t care about selling today, then sit tight and hope for the lucky sale.
For the sellers who are motivated to sell before their listing gets stale, just lower the price early and often until showings and offers commence.
Generally, buyers are willing to pay your price, or close to it, during the first 7-10 days of a fresh new listing. After that, the showings die down and sellers are more willing to accept the reality.
My pricing-accuracy guide for sellers:
- If you are getting offers, the list price is about right.
- If you are getting showings but no offers, your price is 5% to 10% wrong.
- If you aren’t getting any showings, your price is more than 10% wrong.
Eventually, the market will catch up, and an offer will trickle in.
If the listing has been active for months, you are going to get low offers. All that buyers know is that your current price isn’t right, and they are going to take a crack at you.
Don’t take it personally – if you were in their shoes, you’d do the same thing.
How much below list price are we talking? Roughly 10% to 15% below list price – lower than that and buyers won’t bother.
The typical knee-jerk reaction by sellers is to reject the offer outright, or counter-offer with a price that is only 1% or 2% off the list price to show everyone who’s the boss.
Let’s assume that both buyers and sellers are motivated. Where can you expect a typical negotiation to end up?
The eventual sales price tends to be around the midpoint of the buyer’s original offer, and the sellers’ first counter offer.
Buyers and sellers are prone to dis-engage, rather than battle, so you want to get this over with as quickly as possible. Two counter-offers from each side is about the max, because it will take a week to process that many. If no agreement is reached by then, it’s too easy to give up.
So working it backwards, any buyer or seller can plot out their next two moves. Resolve all the other negotiable points in the first counter, and keep the remaining counters focused on price alone.
Once the sellers make their first counter-offer, you can predict where the negotiations will end up, roughly. Select two prices in between, and make them easy to digest by selecting a nice round number. Making a bigger move early does help to keep the other party engaged.
Regardless of how many times the players have been through this process, don’t skip it. This is a new deal, with new players, and going back and forth with counters is the best way to discover more about whom you will be dealing with over the next 30-45 days. You don’t want to rush anyone into a deal.
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