Why it’s good to get low offers on your home…
Who would want to invite a low offer on their home? What a crazy idea.
In this article, I’m going to explain why you should welcome low offers on your home and how they can help you sell your property for a great price.
When we go on the market our defensive side comes out, we put our negotiation pants on and become stone-walled, determined not to let an agent or a cheeky buyer get the best of us.
I’m here to tell you that’s the wrong approach to take. You need to welcome all offers. Even those low ones from buyers who you think might be trying to ‘steal’ your home.
Hear me out on this…
If you want to get a good price for your home, the number one thing you need is offers. The more people offering on your home, the higher the end price will likely be. I’ll explain why…
Definition: A psychological phenomenon where people assume the actions of others in an attempt to reflect correct behaviour for a given situation.
We want that which others want. It’s part of our need to fit into society. We crave reassurance when we make decisions. Especially one as big as buying a home. When it comes to real estate, Social proof (other people wanting to buy the same home) is just what the doctor ordered when you’re making such a big financial decision.
Following that thought – if one buyer offers on your home, it will give other buyers the reassurance they need to take that step as well.
Humans are competitive.
We want to win at something. Anything. Buying a home is a game we can win and that win feels all the sweeter when we have to fight for it. Ask any buyer who has missed out on 10 houses how good it felt when they finally had an offer accepted.
When we are in a competitive situation, whether buying a home, completing a test or attending a quiz night, it brings out that internal fire in all of us which makes us strive to succeed.
As a buyer, being in competition gives us the impetus we need to light that internal fire and go that extra mile to win. In a real estate sense, that might materialise itself in the form of a higher price, a quicker offer, a faster settlement, or fewer conditions.
We won’t inconvenience ourselves unless we have to.
In a hot market, many of the winning offers on houses are unconditional. Those buyers would all much prefer to have their offer accepted and then do their due diligence (builders report, lawyer check etc) but a competitive environment doesn’t allow you that luxury if you want to win. We put ourselves out of our comfort zone when success depends on it.
How a multiple offer situation works…
Most NZ real estate firms roughly follow this process when someone makes an offer on your home:
– Receive a written offer.
– notify all other interested parties
– set a deadline for other offers to come in by
– receive additional written offers
– explain to the original buyer that they are now in competition
– no one knows what the other buyers are offering (except in a public auction)
– inform all buyers offering that they may only get one shot and to put their best offer forward. Buyers lose the ability to ‘come in low and negotiate’.
– present all offers to the owner who can choose to: accept the most attractive offer, negotiate with any particular buyer or go back to the top ones (make a shortlist), or turn them all down and go back to the market.
A competitive situation produces competitive prices. 1 offer in isolation reduces a buyers confidence and leaves you wondering if you really are getting the best possible result.
Any offer can trigger the process above, even a low one.
Sometimes a low offer is all you need to get the ball rolling.
Next time someone makes a low offer on your home, you don’t have to take it, but you should thank them profusely. They are helping you maximise the value of your biggest asset.