The $77,000 Cup of Coffee
I don’t make this stuff up. Similar to the Zen symbol for truth(tattooed on my calf) I tell my real estate truth hoping to save homebuyers money and counter the real estate marketing machine.
Our last newsletter addressed what you are up against as a homebuyer when working with the conventional real estate system. No sooner did I publish that newsletter when I received the following Realtor tip:
“There are times a buyer can be hostile if a seller keeps countering their offer. Let your clients vent and discuss their options and tell them they may be a facing multiple-offer situation.” (Aside: in the majority of sales the buyer is a customer, not a client, which has legal ramifications for the buyer.)
A true and recent tale of multiple offers… and a $77,000 cup of coffee.
History: The home my client was considering buying was purchased in July 2015 by the present owner.
When purchased, the agent told the original buyer he wasworking with (not represented by) that there was much interest in the home and that the listing agent expected multiple offers.
The listing price in 2015 was $379,900. The present owner purchased the home for $377,000. (And no, don’t think for a moment a lender or appraiser provides protection against your mistakes.)
Now, 13 months later, the asking price was $325,900 (the anchor price). In the real estate marketplace a seller can ask whatever he wants, but at Homebuyer Associates the question is always, always – what is the home worth? The anchor is meaningless for value, but a roadblock for negotiation.
We prepared a market analysis of the home and determined the home had a range of value from $295,000-$300,000 – far less than the asking price.
My client’s offer was $300,000, (he told me was willing to pay asking price). During the 24-hour negotiation period we were informed, “There is lots of interest in the home.” Later in the day we were informed, “Another offer was coming in.”
I said to our client, “The two statements may be true…but they may also be false.” My experience told me it was the latter. To increase the offer price meant my client would be competing against himself, paying more than value and reacting to an unknown. The offer remained $300,000.
Our advice went against the prevailing marketing concepts noted in last month’s newsletter and in paragraph 3 above.
We did not use emotion to sell the home. To the contrary, we used information to suggest our client remain with his original offer. Our client’s offer was accepted for $300,000.
Rather than panic or make decisions based on emotion fueled by unsubstantiated comment why not:
1. Get research on market value.
2. Make the best offer you are comfortable making.
3. Don’t compete against yourself with the threat of an unknown offer from others.
Interested in buying a home or condominium? Have a cup of coffee with Seamus or me. We’ll talk, not sell. The coffee may save you $77,000, or $15,000 or $7,000. Consider the coffee a $2.35 investment.
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Thanks for reading,
Michael D. Holloway