Today, I’ll share Part 2 of my ‘Top 10 Greatest Myths of Buyers’!
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Today, I’ll share Part 2 of my ‘Top 10 Greatest Myths of Buyers’!
Without further ado, here we go…
- “I’m a cash buyer so the sellers should consider my low offer” – There’s no question that any offer that has less conditions is more appealing to a seller. If a buyer presents an offer that is subject to finance (which still accounts for 95% of contracts unless sold via auction), there’s always an unknown factor about whether they will have the ability to obtain the finance and the contract could fall apart. In saying this, we regularly meet buyers that make an offer that might not be subject to finance but can be significantly lower than asking price. Most times, these offers are normally still subject to a building & pest inspection so there’s often minimal advantage of time before the contract proceeds unconditionally…so practically speaking, it doesn’t make a huge difference to the sellers anyway. If you place an offer in front of a seller that is $500,000 (for example) that is subject to finance and another offer of $470,000 that is not subject to finance, in 95% of cases, I know which offer the sellers will lean towards. I often ask buyers that make these type of offers “Would you wait an extra 14 days for another $30,000 if you were the seller?” A good agent with adequate experience can normally ask a number of carefully structured questions that will most probably indicate the buyers’ ability to obtain finance with a 90% degree of accuracy. We’ve only had a few contracts fall over on finance within the past 12 months. So for all you ‘cash’ buyers out there, remember that ‘Conditions talk but money talks a lot louder!’
- “The seller paid X, therefore they should consider my offer” – With a multitude of free-to-view websites disclosing home selling prices (some of which can be rather inaccurate), I’m amazed at how many buyers make an extremely low offer and substantiate their reasoning with “Well I know the sellers only paid $236,000 for it in 1997 so they’ve made plenty of money out of this home.” I’ll be honest – this one really annoys me. I often research the buyers’ last purchase and see if they sold their home for a similar price to what they paid for it 15 years ago if they use this argument…and I’m sure you won’t be surprised to discover that they certainly didn’t pass on the same theory when they have just sold. I always let a buyer know that the price the sellers paid for a home has absolutely nothing to do with the current market value today. If they paid a ridiculously low price for it, that’s good luck to them – they shouldn’t be penalised for this when they come to sell. In the vast majority of cases, there’s usually a good reason for a buyer paying a low price for a home. Perhaps they purchased it from a relative, perhaps they were fortunate to find a home where the sellers sold through a really ordinary agent or perhaps the previous sellers were one of the few who were really desperate to sell! Either way, a good agent will turn the discussions towards the current market value of this home in today’s market – not an estimated value in a market from years ago.
- “I need to spend $25,000 on the home so the sellers should accept my offer of $25,000 less” – So let’s examine the two most pertinent words here – “Need” and “Want”. Usually, a buyer who makes this declaration, has these two words a little confused. In my opinion, it’s a successful agent’s job to defend the price that a seller is trying to obtain and when I receive this rationale from a buyer, I politely inform them that the home was priced with these things already taken into account, otherwise the home would have been listed for $25,000 more. If the buyer wants add an extended deck, build a separate carport to house their boat or replace the carpet with polished timber floors, the current owners shouldn’t be disadvantaged if their personal tastes or requirements are different to the new purchasers’ tastes or needs. Sure – a home is worth what the market is willing to pay for it but sometimes, it’s easier for an owner to wait and find someone who has personal tastes that are a little more like their own.
- “Divorce = Desperation” – One of the saddest aspects of the job of a real estate is that one of the main reasons for selling is due to the breakdown of a marriage or relationship. However this rarely means that the sellers are ready to give the home away for less than it’s really worth. Often, a home can be vacated by one of the parties and perceptive buyers will often look for signs of a separation to justify making a low offer if they are interested in the home. A good agent will NEVER let buyers know the true reason behind the home being placed for sale when it is a separation. I’m appalled at the stories I hear where agents share this information to obtain any offers they can get their hands on and try to use this to obtain a quick sale. I often recommend that the sellers disguise the fact by doing a few simple things like placing some additional clothes of the opposite sex in the walk-in wardrobe and adding a few items that would give the impression that a couple are still residing happily. You’d be surprised at how a few simple techniques like this can make a big difference to the final selling price.
Next week, I’ll provide “Top Buyer Myths 8-10” in the final part of my series on this topic.
Until then, Happy Listing & Happy Selling!