Friday night started very promisingly. 
We'd had a closing in the afternoon, and then early evening we got a call that an offer would be coming in on one of our listings.
It's a great listing, good neighborhood and school district, priced VERY aggressively. Around here, recent sales prices have been near 2004 to 2005 purchase prices. These sellers had finished the basement and added hardwood throughout most of the main floor since purchase, and we're priced only slightly above what they paid in 2004. Essentially, the new owner is getting a free finished basement and hardwood flooring included in the expected sales price.
The offer was 88% of list, low but we still thought capable of bringing together. The buyer was a corporate relo and his agent indicated that they'd already made an offer on another area home that was inferior in features, and the buyer had been disappointed in that home's 99% of list counter. Additionally, they had already sold their home in Indiana, but had to go lower than they'd wanted on the sale.
After a couple of volleys, we're still apart, still hopeful, but now at the point where our clients can't go any lower, so the final counter goes over. It's a fantastic bargain at the offer price, but turns out that even though the buyer is capable of going much higher, he's not willing to, nor was he ever willing to approach our list price. He's got it in his head that the percent off list price is his metric for determining if he's gotten an adequate deal. His agent fully understands our listing's value and knows it's a fantastic buy, but can't get his buyer to budge further because the buyer feels he's not getting enough "off"!
So to make this particular buyer happy, we'd have been better off overpricing the listing so he could have gotten a "better deal" in his mind! Too bad he can't understand that the percentage off has NOTHING to do with whether or not you actually got a great buy! A fairly priced home that only takes off a few thousand is better than an overpriced home that gives you tens of thousands off, but still ends at a higher price for the same home! It's the END POINT THAT MATTERS, not how many dollars off you get!
It's a shame, because today we get to deliver the bad news to our sellers that this buyer is walking away. At least the listing has been getting plenty of showings, so just a matter of time until another buyer comes along that WILL recognize the value.
So if you're looking for a home in the Warren County Ohio area and need some experts to discern the great deals from the overpriced ones, just contact The Liz Spear Team of RE/MAX Elite! You'll be glad you did!
Hope you're having a great weekend!
Liz and Bill
REALTORS(S) Serving Warren County Ohio & Adjacent Areas
The Liz Spear Team of RE/MAX Elite
Elizabeth & William Spear
Ask for us by name if you visit the office!
Two locations: Lebanon & Mason, OH
Liz direct: 513-265-3004
Bill direct: 513-520-5305
Fax: 866-302-8418
MailTo: LizSpear@Go-Concepts.com
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35 Comments on Mr. Buyer, Don't Mistake How Much Off List Price With Getting a Great Deal!
Roger, In this particular case, for about 12 hours, having been overpriced might have actually worked. This was never about what the home was truly worth for this buyer, but about how much he was getting off the price. The buyer's agent did his job as far as we can determine, he'd communicated to expect a counter close to list because the value was definitely there. There will be other, more rational buyers for this home.
Don, Within two weeks of listing, we'd dropped $5k (was $225k) to make is an even more of a deal for someone. Of course, the overall bottom line didn't move, but the price for the size and features is fantastic.
Liz & Bill - I often hear buyer's take about "percentage off" and I inform them there is no such thing. If a home is priced right it may sell for full price or possibly more making that percentage 0%, but if a home is over priced, depending on how much, that percent can be 15%.
I can see how this would be super frustrating. I sometimes face same thing in my biz. Only suggestion I have is was the price is vs. appraised value. Maybe that would make more objective rather than pricing stragegy.
Understanding that "a good deal" doesn't have anything to do with the list price seems to be a tough hurdle for so many buyers. If a certain phone is put on the market for $300 dollars, anything less than that is a good deal. People are so ingrained that there is an exact price for everything. But each house is different. What is the value of the house to you, M/M Buyer. More, or less than the value assigned by the owner and his agent?
Michelle, Too much of the mass media telling everyone to take 10 or 15% off. Doesn't account for proper pricing from the start. Every home and situation is unique. For this home, 1 or 2% off is okay, much more than that really isn't reasonable.
Debbie, This one will appraise at full list, and probably above. Sellers are motivated, just trying to get out at even (or slightly above or below). Reality is if you factor in cost of their basement and flooring upgrades, they'd be taking a loss even well above full list. This one is just a case of a buyer not being calibrated to true worth, but instead to a concept of discount that shouldn't apply here. Oh well....next buyer please!
Thank you. How very well-written. And, exactly the point. If the home is well-priced, it should sell for near list. We sold three homes in the last week, averaged 104% of list.
Glenn, Exactly. List price isn't an indication of value so much as a likely place to get a conversation started that hopefully leads to an exchange of ownership. Sometimes list is less than full value, but usually it's more.
Don, You're bucking the trend in your area, glad to hear it! Above full is very rare here still. Some buyers have difficulty understanding what a home is worth is up to them. If unwilling to pay, you have to find something you will pay for, and perhaps sacrifice some of your wants to achieve that concession to price.
These are the buyers who will have to get shot down enough times and lose out on all of the good deals, before you lesson dawns on them and sinks in. They need to get to their "AHA" moment. Then the little light bulb will light up and they'll get it. Too bad this couldn't happen sooner.
I guess that buyer will just end up settling for an inferior, overpriced listing as you said so that his self-affirmed percentages will work.
Kristen, Supposedly the buyers went back to an open counter on another area home and accepted. One they'd initially not responded to because the counter was 99.2% of list! Must have been something there they liked more...perhaps closer to work, or a private school or some other factor that meant more to them. We'll never know for sure unless they run into issues during inspections and come back to us.
BLiz, so sad that a buyer wants a house, but just a few dollars off will make or break a deal! It should be do you WANT the house? Definitely a sign of the economy, and it is hurts everyone, buyers, sellers AND agents! Will be nice when this recession really IS over!
BLiz - Some of my buyers have started their home searches with this particular mindset but after losing one (maybe two houses) that they really wanted because they refused to make a fair market offer. This is just the particular lesson that so many buyers need and for my clients, this is all it takes for them to get serious and quit making ridiculous offers and start making fair market offers that actually get accepted.
L & B ~ it's sad that so many buyer's think they have to get a home for X% less of it's list price vs finding what the true value is. Hopefully another buyer is right around the corner for you.
Joan, Someday! Until then, we'll continue to bust butt to make it happen as often as we can!
Donne, They either learn, or they give up. People need to be a little less concerned with that GREAT DEAL I CAN BRAG ABOUT and more concerned with finding the best possible house for themselves.
Dawn, I think we'll have another buyer before long. It's a 4 BR, LARGE home, 3 car garage, and only asking $219,900, and in one of the best local school districts. It'll happen!
BLiz I wish buyers did play these kinds of games in an effort to prove how savvy they are. It waste valuable time and makes the buyer look like an unsavvy fool.
Charita, Definitely frustrating! The buyer had to have a good handle via his agent that even at full list price, this home is a DEAL! Then to not be willing to get to 95% of list or better is just a waste of everyone's time. Can't control it, but still aggravating to put our sellers through the roller coaster of hoping this would be a pretty quick sale!
This whole thing is a dance. Call me crazy, but sometimes you have to factor this in and price the property in a way that will encourage offers and let the buyer feel good that they got a "deal". Pricing is an art these days. Unfortunate but true.
Liz & Bill, I always try to price the property for what is strategically favorable to sell not to hold on to in this market. When I hear stories like this I find it anoying. First that the buyer's agent can not provide the comps to show the buyers what a good value you have....anyway it happened to me about three months ago, and I was on both sides of the transaction and I still could not convince the buyers. What is the old saying "do not confuse me with facts, I have made up my mind already" sorry to hear about this missed sale...
Jane, The dance is called The Catch-22! You almost need a floating price, one for each buyer that suits what makes them tick!
Endre, Typically, we have two approaches, the price to get gone fast (this case) or the price if you're willing to wait a bit, but want to max out your dollars at the expense of time on market. Our DOM here is at least 90 days on average, but right price and location obviously moves much quicker. We'll get this one done!
Bill & Liz I have total confidence that you will get this one Sold as well, to the right buyer!
Ednre, Thanks! Just a matter of time!
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