As the dust settles and the year ends, I want to recap one of the most memorable offers of the year!
A Buyers Agent submitted an offer almost thirty thousand lower than the listed price of the home for sale in Woodbridge Virginia.
If you find yourself asking. Is that a lot? Then this blog post is for you.
As the Listing Agent, it is my job to present all offers to a seller. I was alerted ahead of time an offer was coming in. I called the seller to let them know. They were excited. Imagine my shock when the offer arrived it was $30,000 lower than the list price!
First thing I did was reach in the freezer and pull out a half gallon of ice cream. I'm not kidding. Hey you deal with stress your way, this is mine. It's one of the hazard's of working from home! REALTOR Life is stressful.
Next, I took a walk to formulate my thoughts. To try and figure out what was the buyer thinking and why didn't the buyers agent warn me. Deciding not to react, I did some quick research and learned the agent was a newly licensed REALTOR from the another County and did not know the area well. Chances are they also did now know how to coach the buyer and help them formulate a winning offer. So sad when this happens.
That said it was an offer. Experience has taught me to deliver such news, as if I was delivering a eulogy. Remember the sellers were excited. The last thing I want the seller to think is my marketing attracted such an offer. This is the offer we had and it is my job to help the two parties come together. But seriously thirty thousand low on a $300,000 home. WOW!
So today's blog is an educational post for all first-time home-buyers in the Prince William County Virginia area who want to buy their first home.
"Do you want to buy a house or do you want to learn a lesson?"
Let me help you understand why the $30,000 Low Ball Offer had virtually no chance of being accepted in today's local real estate market.
- When a homeowner lists a home for sale with a REALTOR. The listing agent runs comparable sales in the community for the past sixty, ninety and one hundred and twenty days to see what the sales trend is, and how long a home takes to sell in the neighborhood.
- They look at the condition of the home, the size of the home and the neighborhood to formulate a "Fair Market Value"
- The Listing Agent typically prepares the seller to be open to assisting with closing costs, a home warranty and maybe if needed a minor price adjustment to remain competitive.
- So you can see the Listing Agent | Seller does not just pull a price out of thin air. They list the home for "Fair Market Value".
- Most REALTORS would not even waist their time listing such an overpriced listing. REALTORS are in the business of selling homes.
- Most homes in the Woodbridge, Lake Ridge, Montclair, Dumfries and Manassas Virginia area sell within three percent of list price and maybe the seller will pay some closing costs and a home warranty depending on the strength of the borrower and the terms to the seller.
Making an offer $30,000 low on a home priced in the $300,000 range is equal to ten percent off the "Fair Market Value" Let's put this into perspective for you. Your first big purchase in your life was probably your car. Right?
Now let's imagine you have a loan on the car. Your car has a $25,000 "Blue Book Value". You only owe $21,000 so depending on the terms you might consider selling under the "Blue Book Value" for a fast sale. You place your ad on Craigslist or popular apps such as Close 5, Offer Up. Let your friends know and you may even run a few paid ads to see what happens. You wait....
Someone emails you and says they will buy it for $18,000 if you are willing to sell it this week.
- Your immediate response is no way. I owe more than that. Or...
- Did you do your research? Do you know that Blue Book Value is $25,000? Or...
- You counter the buyer and say I'll take $23,000 not a penny less. Or...
- You say, I am just going to ignore this buyer. They are bottom fishing. I only want to entertain serious offers from a serious buyers.
- Remember you are the one with the product to sell and chances are their is a buyer who wants your car. You will wait for the right offer.
Fast forward. So what do you think the seller of the $300,000 home said.
Well, they were really fair. They were motivated,more than most. They agreed to meet the buyer half way and countered on price leaving the closing cost incentive exactly the way it was. The reason is simple they remember being a first time buyer. They remember they had the down payment when they purchased but needed the seller to pay closing costs. A fair counter was made.
Guess what happened.
The buyer walked. Did not accept the counter. Sadly, they had an agent who was not skilled in helping them understand that no house of that size has sold for less in the area in the past two years. The agent did not know the local real estate market. So now, the buyer will have to lower their standards, increase their search area further out or rent until prices come down. Don't think that will happen since prices in the Prince William County Virginia area rose approximately four percent last year. Buying a home is not always about what you want, it is about what you need. The seller sold his house because they lowered their price to the counter price so the sellers were the one's who accomplished their goal.
Moral of the story. Hire a good local REALTOR who knows the area well. Someone who can coach you on all of your options and help you make the right decision based on facts and not just a want. Someone who will help you craft a winning offer.
As always if you have a local real estate questions don't hesistate to call me 703-851-3085
Visit our website-TwinsSellingRealEstate.com