Webster defines Science as “a branch of knowledge requiring systematic study and method.”

Five years ago, pricing for a home was determined by a different method. Those days, it was more throw a price out there and wait to see how many offers it attracted. Sellers wanted to list above what their neighbors sold for, buyers were afraid they wouldn’t get the house they wanted so they were writing escalator clauses. Many houses sold for more than the list price. Those days are gone and we probably won’t see them again anytime soon.

Today, list price strategy and offer price strategy are more systematic and back to the old tried and true methods. Comparable sales, location, size, layout and condition are the key elements that we work with. Read the rest of this entry »

Continuing with the Art of the Deal, let’s explore some examples of negotiating techniques that work and those that don’t. The last few years have been seen buyers in the driver’s seat. If a seller wanted or needed to sell, they felt lucky if someone was interested their home over the others available. Buyers felt great power to name their price because if this house didn’t work out, there were so many others to choose from. This kind of “Win-Loose” strategy doesn’t work out in the long run. Buyers came in with unreasonably low numbers, sellers got insulted and an adversarial relationship was set up. If the buyers came closer to the seller’s price, the inspection response would come back with work requests that were closer to what the buyer wanted to pay and the deal usually fell apart. That wasted time and energy on both parts and nothing worthwhile would come from it. As an example, we had a listing that was priced at $875,000 in a desirable neighborhood with a great house on a great lot. A buyer offered $800,000 in a written offer. We are obliged to present any written offer to a seller. The seller countered with a reasonable counter offer to express interest in selling, but the buyer wasn’t interested in negotiating. The buyer was interested in getting a great house at a price that would qualify for the tax credit, which capped at $800,000. This strategy was a waste of time and energy on everyone’s part.

A better strategy is to have a “Win-Win” attitude where a buyer gets a great home at a great price and the seller can move on with their life. We recently had a listing that had been on the market for a considerable amount of time. Two buyers made offers on the property and both were contingent. The seller picked one buyer that had a property that we all thought would sell faster than the other property. Well, the buyer that lost out sold their property in a week and came back to make another offer on our listing. In the end, the buyer got the property they wanted, the seller got a fair price based on the current market and we had happy clients on both sides. Now, when the buyers have a question about the property, they can easily speak to the seller and live happily ever after. THE END
Next month… The Science of Real Estate