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Why Not Price My Home with Room to Negotiate??

by Doug & Gwen Campbell at Sun Bay Associates

A very common question we get from sellers is "Why not price my home high enough to leave room to negotiate?"  This is just about the most common question we get when talking with sellers and potential customers.  It would be really peachy to just say that it is a good idea, go ahead and price your home above the market, someone will buy it.  But we can't.  The following is meant mostly for our market, Tampa Bay.

In truth, we do not take the easy way out, and by giving the customer the hard facts of today's real estate market, they may decide to list with an agent who is willing to put their home on the market at a too high price, let it sit for six months and cost them money and time.  The most successful way we have found to address this question is to make a visual so they can "see" our point about the current market.  After showing the customer all the data from our research into prices in their neighborhood, surrounding area and the greater area also, including less than positive data from NAR and the local and national media, there are many who still immediately ask why not build in negotiating room.  One response we have had success with is to let them know the reality of pricing and the way the market searches for real estate.

If the house has a market value of $175,000 and they want to price their home at $200,000, for the "wiggle room", we let them know the market that is looking in their real price range doesn't even see their house because it is too high and is in a different search bracket.  Buyers, and agents, often search in $25,000 brackets and if someone is looking for a home in the $175,000 range, because that is what they are approved for, they are not going to even look at anything priced for $200,000.  They won't often even look for anything priced at $180,000 since they are not approved.  Today's buyer is very savvy and is aware that if houses are priced too high, there are many, many others that are correctly priced and there is no point in getting into a haggle over a few thousand dollars for an over-priced house when there are many others that will accept a price that is fair on the first offer.

For example, one visual that has been successful is to compare the price of a house to catching a train.  I know the train is scheduled to leave the station at noon.  So I show up at ten after and wait, and wait, and wait.  Why?  Because the train has already left the station.  In this market, the prices are not going up, so why price a house above the market?  All that does is cost the seller time and money, because in this down real estate market, the longer a house is on the market the more value it loses.  Thus, being priced for "negotiating room" is being too high in the marketplace and buyers are not even going to find the house to consider making an offer that the seller might accept.  In other words, that train has left the station and your house is going to sit on the market, become a stale listing, lose value and after six months of being ignored by the market because the seller wanted more, and the agent allowed it, the customer is going to feel that the real estate agent did not do his job.

So, the customer must realize that realtor consultants are working to sell your home.  Otherwise, the customer does not sell her home, loses time and money and by the way, the realtor not only does not get paid, but also loses money.  An overpriced listing is almost worse than no listing at all.  It is the responsibility of realtor consultants to price a home correctly in this market to best serve their customers.  As long as prices continue to fall, there is no point to price your home higher than where the level has already been.

Making an Offer on Real Estate

by Doug & Gwen Campbell at Sun Bay Associates

Is an offer to buy a house an insult even if it is very low??  Of course not.  An offer indicates that the buyer at least has more interest than everyone else who has looked at a house and kept on shopping.  Owners shouldn't get insulted about low offers, they should look at a low offer as the beginning of a negotiation.  All business deals start somewhere and often the two sides are very far apart, in the beginning.  This happens very often in the Tampa Bay real estate market, as well as everywhere else where real estate transactions happen.

The art of negotiating a real estate transaction is the heart of the deal.  The realtor has to present the offers to the seller, and then present the counter-offer, if there is one, to the buyer's agent.  Seller's who get insulted at a low offer, make the deal personal and refuse to negotiate cause one unavoidable result.  They are left holding on to a house that is not going to sell to that buyer - ever.  The seller who may not like the first low offer, and makes a counter-offer, is the seller who will in time sell the house to that buyer, for more than the original offer.  This is a win-win situation and is the goal of all business deals.

When a seller refuses to negotiate when they get a low offer they are simply making a higher offer than that buyer did and "buy" the house, in a manner of speaking.  Since the potential buyer couldn't buy that house, they moved on.  The owner has in essence, outbid that buyer, and ends up continuing to own the house. 

It is important to remember that many times the first, "low" offer came from a serious buyer who took a shot that the seller would be desperate and accept a known low offer.  The buyer in this case fully expected the seller to come back with a counter offer and start a negotiation.  No counter offer equals no deal.

The long and short of it, no matter how "low" an offer is, it is well worthwhile to come back with a counter offer.  This will tell the seller if the buyer is serious and willing to negotiate, or not.  If a buyer makes only very low offers, and will not accept a counter offer, nothing is lost by the seller.  In the Tampa Bay real estate market, this happens quite often because of the number of foreclosures and short sales.  If the seller refuses to negotiate, there can never be a successful negotiation that results in a sale.  Most sellers in the Tampa Bay market will respond with a counter offer and this leads to more successful transactions.

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Photo of Gwen and  Doug Campbell - The Campbell Team Real Estate
Gwen and Doug Campbell - The Campbell Team
at Keller Williams Realty
30522 US Hwy 19N, Suite 107 S
Palm Harbor FL 34684
Doug's Cell 727-741-4189
Gwen's Cell 727-741-7260
Fax: 888-447-7908