If you look at most healthy real estate times of the year, focus on when schools let out, you will see a bit of a slow down on the sale of homes. This is because a lot of folks with kids are using that time to be "family-centric" and doing some vacationing. Or maybe taking a breather from all the dropping off and picking up. Still, real estate markets in most areas tend to slow down for a while.
During the holidays is another good example. As we approach Halloween, the Days on Market timeframes tend to increase. Inventory stays quite steady and most home buyers look at the homes listed during that time with adorable anticipation. Thinking that there is a great deal to be had. I mean, if someone has their home on the market during Christmas, they must really need to sell.
That is not always the case, but I will tell you as I have seen in quotes, "You miss 100% of the shots you don't take..." (Wayne Gretzky or Michael Scott or...) - Lots of argument as to where this came from - but it still is an awesome quote.
I'll get into the "why buyers are not afraid of writing a lower than listing price offer". This intel is also for the home seller's benefit. In some cases, sheer panic ensues when their agent is not forthright enough to keep them in the loop with feedback.
When I'm pricing real estate for a home that I'm going to be selling, I make it a point to look to all the real estate syndication websites (zillow, trulia, redfin, realtor.com and the others) to see what they say homes are worth according to their "algorithm - or whatever".
If you are a home seller or a home buyer, the "whatever" is going to make more sense to some of you :)
These systems are in place to sell your personal information in the form of a lead to those agents, vendors, real estate lenders, mortgage brokers, grocery stores, local food chains, etc. But first, they have to get you to give it up.
They do a good job and some agents and vendors pay tens of thousands of dollars a month to get your personal information in order to sell you something.
As for me, personally, I'm not a part of that mess. I do my best on our local Real Estate Podcast and within our Santa Clarita real estate blog.
When I look up prices "according" to the syndication websites, the number is very much different than the MLS, Multiple Listing Service, comps that I find within the Board of Realtors system.
In some cases, it's close - but in most those valuations don't take into account the home buyer drive. They are estimates on the closings, not the overall market health and activity.
For example, there is a sweet spot with every real estate market. If you have a home to sell and if it's in that sweet spot where many buyers are focused because of area, price range, size or other factors, they will pounce on that listing in numbers, no matter what time of year it is. When that happens you have a multiple offer scenario and your best negotiation tool.
Negotiation is built in
I explain that negotiation is not about playing games, if you could haggle over a loaf of bread and think that Ralphs would reduce the price for the asking, you would do it.
In real estate, everything is negotiable.
When you are buying a large ticket item, such as a home, that without changes to the financing, typically will take 30 years to pay off, you should be ready to negotiate.
Most home buyers that have good agents are ready to haggle a bit.
Of course, both parties should be advised the longer the haggling process, the less time is on your side. Meaning, if there is a home buyer willing to come in at list price, they may do so and get the home while the other buyers are wanting a "better deal".
The same logic applies to the home seller. If the home seller is waiting for that response to their counteroffer regarding price, another home could come onto the market which fits their buyer's liking. If that happens and if the buyer writes on that, getting it while the seller is waiting for a response, then you have to regroup and start the mission over.
I don't want to be offensive
In some cases, some people are offensive from the word "GO". They come off as arrogant and hostile, you only have to look at some of the local real estate agents :).
However, don't fret. The home seller should have been brought up to speed regarding offers at lower than their listing price potentially coming through.
That possibility needs to be addressed as the elephant in the room and the strategies should be talked about to counter or reject those offers.
All offers need to be presented. If there is an agreement between the home seller and their agent to automatically reject all offers at less than listing price without needing to confer with said seller, then that is how that will play out.
In most cases, the sellers don't play that type of hardball. They typically want to review all offers. Also, most home buyers don't write so much less than listing price without reason or without validation.
Wanting to get a good deal is just that. But to gouge the home seller, most buyers won't. However, there are exceptions to every rule. The same applies to home sellers taking a hard line when it comes to the buyer's request for repairs - it happens.
Like beauty, getting offended is also in the eye of the beholder. But with good advice and stories of others providing that social proof, you can be a winner on either side of a real estate transaction.
Go with good advice and keep your emotions in check the best you can.
Days on Market timeframe averages
Real Estate data and statistics is also something that should be used if a home buyer is going to write less than listing price. This way the seller is not looking at it as an offensive prospect. They see the reasoning that was supplied in the form of factual information about their "why" of offering at that amount.
Most of the home buyers that offer lower than listing price are looking at the data that their agents have sent them.
However, after looking at many different homes, and seeing how long they are taking to sell, most home buyers start to understand the market and become more accurate with their offering prices.
Several factors should be taken into account when it comes to looking at the Days on Market time frames when considering making an offer.
- Apples to apples
- Within 1/2 mile
- 180 days of inventory
- Several comparisons
- Photo validation of condition
Apples to apples refer to comparing the same types of real estate. If the property in questions is an attached single family home. The comparisons need to be between other attached single-family homes. If those homes and data don't exist in enough numbers to do a good evaluation - at least 7 closed sales, the agent is going to have to determine the difference between a non attached single family home and one that is attached.
Once that occurs, then the agent is able to align the sights better for a more accurate shot at the offer and the listing price.
It seems like a lot, but a savvy and experienced real estate agent will be able to get the data together quite fast and provide while your lender is putting together that pre-approval letter.
You miss all the shots you don't take
When going in you are going to want to make sure you are ready for all the possibilities. Maybe the home seller won't respond. Maybe they have an agreement with their agent to respond with "rejected" with any offers that are $10,000 less or more from the listing price.
There is a multitude of variations regarding how the seller can or may respond.
Knowing up front as a home seller how the buyers may respond to their listing price is also important from a sellers perspective.
To not be offended because of the offering amount is critical.
If you see a home that has been listed for 100 days, when all the other homes that are used as comparable listings (by the appraisal standards), are selling within 50 days, you may have a price issue.
There are other reasons besides price why a home that is priced right isn't selling. It could be that the home has upgrades that are not the norm.
Maybe the listing has had $60,000.00 in purple stone countertops, backsplashes and bathroom vanity tops with shower enclosures installed.
In this case, the upgrades have pushed the listing price of this home up for about 1/2 of the cost of the upgrades, per the current housing market.
However, if purple is not the "desired" upgrade color or if it's offensive to a majority of the current home buyers in the market, although the home is priced right, it may not sell until the "purple lover" presents themselves.
Then the natural follow-up question that needs to be addressed is how long will that take?
Of course, there is no way of knowing. Most home buyers will think that there will be "too much" to do even if they get the seller to discount their home $30,000.00. Even though that number makes sense, and most buyers can calculate that, it's the time and displacement of conducting such upgrades after they close escrow.
You have the time, and you have the cost. A $30k discount from listing price for the home buyer due to "non-typical" upgrades is awesome. The other question is how is the buyer going to pay for them when the time comes?
A $30,000.00 discount on a home mortgage amount is a lot less than putting $30,000 on a credit card. It'll be hard to bridge the gap between the two and even if the seller pays the buyer's closing costs - they are allowing them to be financed, there is no "actual money" that changes hands so the buyer can implement these changes.
Low Ball Offers on homes that are for sale are written day in and day out. Just make sure that your agent knows who their employer is, that's you. Make sure they are serving you at your expectational level. Also hiring local, real boots on the ground agent is also important.
Stay cautious of the real estate syndication websites. I have been writing on our SCVblog, Santa Clarita real estate blog, since about 2004 - that is when blogging was mostly family photos and trips.
Today, we have the most visited real estate blog for Santa Clarita real estate. I represent both buyers and sellers of Santa Clarita homes and have a referral network for finding a Top Real Estate agent in all of California. All I need to know is what city you are interested in having a home sold or buying a home within.
I'm Connor MacIvor and I have been representing home buyers and sellers since 1998. During that time I have seen the housing market change and shift several times. I always want my home buyers to be prepared to address real estate to their ultimate advantage.
In order to do this, I only want to manage one side of the transaction. I want to be either the Seller's Agent 100% or the Buyer's Agent 100%, not both, nor do I practice Dual Agency.
When ready reach out to me directly and I will walk you through the entire home buying or home selling process. I'm Connor with HONOR and I'll make sure your real estate is WON, not just done.