Old Sayings That Aren’t So Old!

May 27th, 2009 categories: For Sellers

There are old sayings in the Honolulu real estate business, some are true and others are not. Here are a five that I have found apply.

1. “Your first offer is your best offer!” I have sold and observed the sale of thousands of properties and more times than not, the offer that gets the seller the most money is the first offer to come in. Time and again an offer will come in early in the sales process, the price is not quite what a seller wants and a counter offer issued. After some negotiating, the deal dies and the work to find another offer resumes. More times than not, the offers that follow are incrementally lower than the first and, ultimately, many sellers wish they would have made the original offer work. Lesson-do everything you can to make the first offer go to escrow and close.
2. “A low offer by a buyer does not necessarily lead to the lowest price for the buyer.”
Buyers often ask the question, how low should we make our first offer? There are many answers to this question, but the one to keep in mind is that if the offer is too low the seller can be insulted and become less flexible. Buyers need to realize that most sellers are emotionally attached to their property and m an insult about a home is an affront to the seller. As a rule of thumb, I have found that sellers start getting insulted when an offer is more than 10% lower than their list price. Lesson-try to figure out the lowest price a seller is willing to accept and come in just below that price. This strategy has produced excellent values for many of my clients.
3. “The biggest mistake you can make is to over price your property.” Over priced properties don’t sell! The “market” knows the value of a home and if the list price it too high brokers and buyers won’t take the time to look at the property, let alone make an offer. Buyers are looking for value and they will pay within the range of value for a particular house, but if it is too high they won’t waste their time with the home. Lesson-price a home very close to where it is expected to sell (within the market value), this accelerates showings and leads to more offers and a higher price for a seller.
4. “Buyer’s who pay the most…have no imagination.” The vast majority of buyers want to buy a home that requires no work. This means that if your home needs new carpet, fresh paint and repairs most buyers will deduct a significant amount for every bit of work that needs to be completed before they move in. If a seller has the time, inclination and money to prepare and stage a home before the sales process begins, that seller should get sold more quickly and at a higher price. Anytime I have to tell a buyer they could paint or change the carpet, I see them reducing the price they are willing to pay. I estimate that if the true cost to fix something is a dollar, most buyers try to get a five-dollar concession from a seller. Lesson-to the extent possible, eliminate anything that requires a buyer to imagine how things could be once they make a repair or improvement.
5. “Properties that back to or corner on a busy road, experience a 5% to 10% price devaluation.” The first listing I ever took was on the corner of a very busy street. I used comparable sales from within the subdivision to value the home and at the end of the sales process the seller received about 10% less than homes that were not subject to the noise and traffic. Here are three lessons about properties on subject to lots of traffic and near a busy road.
a. Lesson 1-if at all possible don’t buy this type of property because when it is time to sell your home it will not be worth as much as homes in a better location.
b. Lesson 2-if you are selling one of these homes, in order to get sold, be prepared to make your price low as compared to other homes for sale in your neighborhood. Your home will have to look like a good deal to attract buyers.
c. Lesson 3-if you are selling one of these homes, making sure your home is crisp and clean with no deferred maintenance will help you to sell too.

My business is full of rules of thumb and sayings. The above are just a few of them that are heard on a regular basis. As with many things, they are the culmination of the collective wisdom of the real estate market. Think about it.

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If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.

This entry was posted on Wednesday, May 27th, 2009 at 9:57 am and is filed under For Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.