There is some sort of weird etiquette in the real estate industry that you don’t lowball people on their houses - you don't want to offend the sellers.
Sellers don't seem to understand this.
They tell us “There's no harm pricing high - buyers will just offer under!" Except they don't. Which is why we spend oodles of time, using market stats and graphs, convincing sellers not to overprice their houses.
It gets frustrating on the buyer side too. We see countless buyers going through headache and heartache piling-on (20-30 offers deep!) on the nice, well-priced homes.
While passing on the houses, that they think they didn't like. But what they didn't like was not the house, it was the price.
The entire experience of looking at a house is through the prism of price.
This is what we tell sellers when they ask for “feedback” on showings. Feedback is pointless.
Because the rule of thumb for any feedback is….you have to add “for the price” at the end to get the truth.
- “Too small” …for the price.
- “Too close to the freeway” …for the price.
- “Needed too much work” …for the price.
There's a price at which 100% of buyers who see a house, like it.
Example is yours truly as a new agent being clever and listing a house for $1. The LA Times headline: “Three Bedrooms, One Bath -- One Dollar” (in case you're wondering, it sold for market price, $475,000, with a million offers).
At that price, 100% of buyers liked it.
On the other hand, there's a price at which 0% of buyers like a house.
**Amazingly, that's half the homes on the MLS right now. They are slightly overpriced and just sitting there.**
So buyers, here's your strategy - go ahead and OFFEND SELLERS. But here are the rules.
1. The home must be sitting on the market for 30 days or more. There's little point lowballing a well-priced home. How do you know it's well-priced? Your agent should be able to tell you if a home is going to be competitive before writing an offer, and if it's competitive, write over list, not under.
2. If the price is low, the rest of the offer needs to be solid. The seller won't take a haircut on price if your terms are garbage, so keep your inspection periods short, offer clean, and make sure it's well-presented.
And overall, just don't write stupidly low offers. Waste of time.
But if a house is sitting at $2.5 million, after 30-45 days…offer $2.3M. You'll probably get it. No one else is doing that. Buyers - there is opportunity for slightly overpriced houses. The market will correct a price UP efficiently and accurately. It generally won't correct a price DOWN.
Get offensive and get your house.
