Think of it this way. Everyone involved in a negotiation of any sort, has their own concept of what the next steps should be. If I offer “x” then the other party should be expected to respond somewhere in the vicinity of “y”.
Take it down to the most simple level…the Saturday Afternoon Garage Sale. A sweet, vintage JVC “boombox” is being offered for $25. That $25 price is essentially an offer from the Seller to the world at large. The Seller, having thought and contemplated, determined that the Buyer would be willing to pay at or near that amount.
Up rolls the Buyer and they’re ready to deal. With their eyes locked on that majestic music maker, they instantly have their own price in mind. They think “is the Seller’s offer a reasonable one or not”.
One of 4 things will likely happen next:
1. The price for that JVC is so grossly out of whack with reality that they walk right past and move onto those sweet 195 Rossignol downhill skis from the early 80s.
2. The price is high but they’re willing to offer anyways…they want that JVC beauty and they’re going to get it. Let the back and forth begin.
3. $25 seems to be fair market value in the Buyer’s opinion (or close to it). They want that glorious ghetto blaster but would still like to do some type of negotiating even if the mission is to save just a buck or two.
4. That, my good sir, is quite the deal. I’ll take it. Deal is done at $25.
Let’s look briefly at these 4 scenarios:
1. The issue with this is that the Seller and Buyer are not even given the chance to get to the negotiating table because of one reason: price. It is near impossible to know how often this happens too but for sure, as a Seller, you will be missing out on opportunities.
2. This happens but not as often Sellers like. Quite often the Buyer will lean towards category #1 and keep moving. As a Seller in this scenario, you are really hoping supply & demand will help you find that motivated Buyer.
3. This is the most common scenario provided all things are reasonable and balanced. The benefit of finding that pricing sweet spot will put you in this group which will help put your unwanted JVC in someone else’s house and get you fair market value in return.
4. Awesome. Case closed. Now, take this to the house selling scenario and the same 4 situations will happen. The fair market value of a house seems to be $250,000.
Those 4 scenarios would then be:
1. List price of $289,900. This will only help your competition sell, which will be listed in the $255 to 265,000 range. They’ll love you for it. Eventually, provided the motivation to sell remains, the seller reduces. Then reduces again, And again. Eventually (and hopefully) they get their fair market value.
2. List price of $275,000. Close, but not close enough. Some times an offer comes in despite the over-pricing. Remember, the Seller’s asking price is their offer to the general public. The Buyer wants the house so they offer $250,000. The Seller signs back at $273,000. The Buyer almost invariably moves on to door #2.
3. List price of $260,000. The Buyer sees it, can rationalize and give the big order…draw up the papers. Let’s make an offer! The back and forth begins and the house sells for $252,500.
4. List price of $255,000. The Buyer doesn’t want to mess around. They’ve missed out on 2 others before. Or they’re negotiating style is ‘lets get this done’. They draw up the offer at $252,500. The Sellers accept. Done deal, case closed.
So, what is the best route to go?
Well, that’s the part where we come in.
- Establish a price.
- Determine who the likely buyer is.
- Determine how best to reach them.
- Plan, prepare and start on the right foot.
- Then get ready to say goodbye to that JVC!
To discuss your home or the real estate market in general, feel free to contact us at anytime.
Thank-you for visiting,
THEbTEAM.
Thank-you Thomas Evans for the old skool photo.