Are prospective buyers and sellers making reality based decisions when it comes to making a home purchase or selling their home? Has the increase in consumer confidence given them a false sense of reality when it comes to the buying and selling of real estate?
Show Me the Money
We all hear the commercials about how you can get into a house without using any of your money. We hear these all the time. But as the old saying goes, if it sounds too good to be true... Common sense would tell you that you need money to buy a house. You need money for not only the down payment, but for your closing costs as well. But when potential buyers hear those ads or read about special programs they think that they too can buy a house. What they fail to understand is that just because there are first time home buyer programs that will assist you with some of the cost, doesn't mean that you don't have to put any money into the purchase. They forget that lenders will require they have some money in reserves to ensure they can make the monthly mortgage payments. Although financing restrictions have relaxed somewhat, they haven't relaxed to the point where you can buy without having "any skin in the game".
My House is Worth More
As for sellers, they see, hear and read that the market is heating up. Demand is increasing and they assume that their house is worth more. Unfortunately that isn't always the case. There are a lot of factors that go into the pricing strategy. As real estate agents we know that every seller thinks their house is the best house in the neighborhood and is certainly worth more than the house that sold down the street. What sellers fail to understand is that every house has positives and negatives that will have an impact on the price. Of course they don't want to hear this, but part of our job is to present the facts and let the data speak for us. In the end the seller can select any price they like, but the market will have the final say as to whether or not that price is realistic.
Multiple Offer Situations
There are some agents who will allow the seller to under price their property in hopes of receiving multiple offers. This is definitely a dangerous strategy. What happens if the seller only receives one offer? Are they willing to accept an offer than comes in at list price? If a buyer makes a full price offer they don't expect the seller to come back with a counter offer that is higher. Buyers will walk away before they pay over the list price. Ask the seller upfront if they would be willing to sell their house at the list price. If the answer is "no", they need to list the house at a price they would accept if they only receive one offer.
Buyer's Remorse
In the heat of the moment, buyers want to win...and who doesn't like to win. But after the excitement dies down and reality hits, it's quite easy for them to start thinking, "we overpaid" or "did we overpay?" When you believe your buyers will be facing a multiple offer situation, have them think about what the property is truly worth to them BEFORE you submit their offer. This gives them time to consider the property, their investment and their motivation. When they determine how much the house is worth to them upfront, they are either thrilled with they win or they are okay if they get outbid because they did the best they could and are happy with their decision.
Related Articles
- Do You Price Hoping for Multiple Offers?
- Real Estate Agents Are Worth Every Penny
- What is Your Seller Looking For in an Offer?
- Preparing Your Buyer to Win
- Let the Data Do the Heavy Lifting
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