When the market strongly favored sellers in 2005 and 2006, they usually didn’t entertain offers the first day their listing showed up on the multiple listing service. If they had, they might have left money on the table. There were so many buyers chasing so few listings that waiting a week or so to hear offers often resulted in over-asking-price offers.
Today, that strategy is still used in some hot niche markets that defy the national trend. Listings in some locations and some price ranges are in high demand. If the inventory of listings in these areas is low, it creates an imbalance that favors sellers in what is otherwise a buyer’s market.
For example, one listing in Piedmont, Calif., a city with a great public school system, recently sold for $200,000 over the list price. The seller waited to hear offers until after two public open houses and a broker open house. Had he accepted offers earlier, he might not have done as well.
HOUSE HUNTING TIP: Waiting to hear offers can cost you money if your home isn’t priced right for the market. If you price too high and also insist on waiting to hear offers, you’re letting agents and their buyers know that you expect to sell for an unwarranted price.
On an overpriced listing, if offers aren’t written by the designated date, you need to lower the asking price, usually by a significant amount, in order to rekindle enthusiasm for the property.
It’s natural for sellers to want to get as much money as possible for their homes, particularly if they have a high mortgage balance. It’s important to remember that the market sets the price, not the seller’s expectations, dreams or how much they owe against the property.
One of the hardest exercises for sellers is to look at their home objectively, through the eyes of buyers who are hypercritical. Sometimes it helps for sellers to look at open houses of listings in their neighborhood that are similar to their home. However, some sellers are so emotionally attached to their homes that looking at other listings only strengthens their resolve that their home is worth more.
It’s imperative for sellers to detach themselves from their homes in order to price for the market. Even in the hot segments of the market, overpriced listings don’t sell. It helps to have an objective party advising you. Choose a local real estate agent who you respect and trust to represent you in the sale of your home.
Ask your agent to explain to you how your home compares with comparable listings that have sold in your area recently. What you might consider a benefit to your house may not be desirable in buyers’ eyes. Listing at a price that’s too high for the market will only hurt the marketability of your home in the long run.
Some buyers have an aversion to making an offer in competition against other buyers, especially if the news is that prices may not have hit bottom. In this case, you might not want to broadcast that you’re waiting to hear offers until a specific date.
Here’s another strategy to consider. Have your real estate agent tell agents and buyers who inquire about your game plan for offers that you haven’t set a date, but that you want your home to have exposure to the market before you hear offers. In this case, you would at least want to have broad Internet advertising with photos, an open house for agents, and a public open house.
THE CLOSING: Putting off buyers who are interested in your home could backfire. So, don’t wait too long if there are buyers who are serious about making offers.
