Several recent transactions have suggested that this topic is of significant interest to many home buyers. The results of one strategy in particular were surprising.
Make your best offer – And stick with it!
Interesting. I think that most buyers (and perhaps many licensees) believe that you go in low and then work up to a price that you, the buyer, are willing to pay and that the seller is willing to accept. The theory is that you will get the best price. Well, three of my recent transactions, all in the $400,000 to $500,000 range, suggest that is not always the case. I did extensive market analysis for my clients and they each had a number that was acceptable to them but, in various degrees, below the value that I had derived. Because of the lower figures, I suggested that we offer their “highest and best” up front and to let the seller know of the buyer’s position.
Three different results
In the first case, the seller promptly accepted the offer. We had learned that the transaction was to be via Power of Attorney. I have learned that in these cases the objective is often “get it sold”, not “get the absolute best price”. My buyers did not need a loan and could close quickly. Done! In the second case, my clients were also cash buyers with flexibility in the closing date and looking for a really “good deal”. In this situation we were able to learn that the owners had recently divorced. A divorce is also an indication that the “sale”, rather than the “price” can be more important. We went in with an agressively low offer which was countered. I discussed this with my clients and we dicided to reject the counter and to let the seller know that if they changed their minds to let us know. Five days later I received a call from the listing broker saying the seller would accept my client’s offer. Done! The third situation was slightly different. My clients directed an offer below the range that I had calculated which was $25,000 under the asking price. The seller countered with just $10,000 below asking. My client did go up by $5,000 which seemed to irritate the listing broker. The seller rejected that counter and we once again said “let us know if you have a change of heart”. Less than twelve hours later I received a call that the sellers had accepted my clients. Done!
So, how do you know when to use this technique?
Try to have a broker on your side who is willing to do some research into the seller’s situation and motivation and who has enough experience to be able to evaluate conditions. Of course, you also need to be willing to walk away from a particular house. If you are in the Denver area, you can contact me for that expertise.