Residential Real Estate is such a fascinating business. Emotion and business can sometimes get confused and muddled to everyone’s loss. At other times, grace and generosity prevails and everyone comes out smiling. I recently helped a Buyer find a home he liked very much but it needed a fair amount of work. For example, it needed a new roof, a new heating system and new stucco. The house was priced just outside my Buyer’s price range but he really liked it. Given the work that was needed, the Buyer subtracted the cost of the potential work from the list price and made his offer. The Seller paid over $50,000 more for the house than his current list price and he had been forced to reduce the price of the house several times already. When he saw the offer presented he blew up, was thoroughly insulted and refused to even respond to the Buyer.
Things have changed recently. Sellers who bought homes at the top of the market in 2005 and 2006, and have to sell now are feeling loss, pain and fear. The market often demands that they sell their homes for less than they paid and this hurts. It seems unfair. It feels like a betrayal of the American Dream.
Because there are so many competing homes on the market, for a house to sell, it has to look like a model home, be in perfect condition and be priced under market value. This is a huge challenge for most Sellers. And, as if that were not enough, still the offer that comes in is far lower than they ever imagined.
In working with Buyers and Sellers, I have seen Sellers react in many different ways and have learned that there are some reactions that are productive and some that can be destructive to the Sellers own interests. When a Seller receives a lower than expected offer, the response that cuts off all possibility is to be insulted, angry and refuse to make a counter offer. While these emotions, under the circumstances are understandable, most of the time, Buyers intend no insult. They are simply considering their own financial picture and making an offer based on their own needs. Sometimes they may be testing the water to find out how flexible a Seller is willing to be. A more productive approach for Sellers in this current Buyer’s market would be to consider any offer at all a sign of interest and therefore, a compliment. If the offering price is just not acceptable a Seller should make a counter offer anyway and see what happens. I have seen Buyers accept counter offers that have moved very little off the list price. Sometimes, the Buyer just needs to know that a Seller is willing to meet him part way. Other times a more protracted negotiation is necessary. And, sometimes, it works to take the focus off price by having a willingness to give in other areas such as appliances, repairs or closing/funding dates. There are innumerable ways to come to agreement but first it is necessary to step out of the raw emotion and consider the possibilities.