Tag Archives: offers

Three tips on listing low to get multiple offers

Three considerations before listing low to get multiple offers

Q: What happens when you start out listing your home at a low price to entice buyers and the first offer is full price but no other offers come in? Are you stuck selling at the lower price (at which you never actually intended to sell)?

A: With multiple offers on the comeback, many savvy sellers are pricing their homes on the low end with the intention to drive buyer interest and — fingers crossed — generate multiple offers. In markets where rising buyer activity and home values have already begun to decrease the inventory of available homes for sale, this strategy has been very effective. However, there is always the risk of precisely the problem you pose: What happens if you get only a single offer at the asking price?

Here are several pieces of advice for sellers who are worried about what happens when listing low doesn’t result in multiple offers:

1. Consider what the offer you get does and does not mean. You are never obligated to sell your home at a price you don’t want to, no matter how close the offer is to what you are asking for the property. I’ve actually seen a couple of situations in which sellers get a single full-price offer and reject it or issue a counteroffer, sometimes because they are in the situation you describe, and other times because it has come to their attention that they owe more on the home than they expected. (Don’t plan on doing this, though; it is a strategy with a high likelihood for disgusting a buyer and turning them all the way off.)

The reality is that, if you get only one offer at a given price, that may truly be the fair market value of your home even if you think you might have gotten a higher offer for the property had you asked for more. To live in that world of “what might have happened if” is to torture yourself with the impossibility of guessing at what a hypothetical situation would have turned out like. The real deal is that if you had asked for more, it’s possible you would have gotten more. It’s equally possible that the one buyer who did make an offer would never even have come to see the property.

2. Understand your listing agreement before you list it low. Under some listing agreements (your contract with the agent who lists your home for sale), a full-price, cash offer with no contingencies may obligate you to pay a commission even if “full price” is the discount price you set in an effort to get multiple offers. You can negotiate to change the default terms of your listing agreement, though, so that you are obligated to only pay a commission on a transaction that actually closes. You would need to do this before signing the agreement, and before the home goes on the market.

Get some legal advice from a local attorney if you don’t feel you completely understand the terms and implications of your listing agreement before you sign it and before you set the list price of your home.

3. Don’t list your home at a price you’d be upset to receive for it. The savvy sellers who list their homes on the low end to generate multiple offers are not listing their properties hundreds of thousands of dollars below their fair market value, or even making them the lowest-priced home in the neighborhood. Smart, aggressive pricing is listing a home at what seems like the low end of the range of comparable-supported prices or a slight discount from that — about a 2-5 percent discount, not 40 or 50, or 70 percent.

Many sellers are OK with taking the risk that their home might sell at 2 percent below the comparables as a trade-off for the opportunity to generate multiple offers and the possibility of receiving a premium sale price. And if you are a seller considering listing low, you should be aware of the potential trade-offs, and should make that decision only if you have market data to support the fact that this strategy makes sense in your local market.

To be crystal clear, as a seller, you should not list your home at a price you would be upset about receiving or unwilling to accept.

And remember that “listing it low” is a strategy that has proven to be successful for people specifically aiming to generate multiple offers in the many markets that currently support multiple offers. If your objective is simply to sell your home — period — in a down market, for example, then this may not be the route for you to take.

Every market is different, and every home and seller is different. If your market is still very soft or you don’t see any multiple offers happening in your town, you may not be able to generate loads of offers no matter what you price your home at. As always, work with your agent and take a long hard look at your local market dynamics before deciding on a pricing strategy.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

Three considerations before listing low to get multiple offers

Three considerations before listing low to get multiple offers

Q: What happens when you start out listing your home at a low price to entice buyers and the first offer is full price but no other offers come in? Are you stuck selling at the lower price (at which you never actually intended to sell)?

A: With multiple offers on the comeback, many savvy sellers are pricing their homes on the low end with the intention to drive buyer interest and — fingers crossed — generate multiple offers. In markets where rising buyer activity and home values have already begun to decrease the inventory of available homes for sale, this strategy has been very effective. However, there is always the risk of precisely the problem you pose: What happens if you get only a single offer at the asking price?

Here are several pieces of advice for sellers who are worried about what happens when listing low doesn’t result in multiple offers:

multiple offers1. Consider what the offer you get does and does not mean. You are never obligated to sell your home at a price you don’t want to, no matter how close the offer is to what you are asking for the property. I’ve actually seen a couple of situations in which sellers get a single full-price offer and reject it or issue a counteroffer, sometimes because they are in the situation you describe, and other times because it has come to their attention that they owe more on the home than they expected. (Don’t plan on doing this, though; it is a strategy with a high likelihood for disgusting a buyer and turning them all the way off.)

The reality is that, if you get only one offer at a given price, that may truly be the fair market value of your home even if you think you might have gotten a higher offer for the property had you asked for more. To live in that world of “what might have happened if” is to torture yourself with the impossibility of guessing at what a hypothetical situation would have turned out like. The real deal is that if you had asked for more, it’s possible you would have gotten more. It’s equally possible that the one buyer who did make an offer would never even have come to see the property.

2. Understand your listing agreement before you list it low. Under some listing agreements (your contract with the agent who lists your home for sale), a full-price, cash offer with no contingencies may obligate you to pay a commission even if “full price” is the discount price you set in an effort to get multiple offers. You can negotiate to change the default terms of your listing agreement, though, so that you are obligated to only pay a commission on a transaction that actually closes. You would need to do this before signing the agreement, and before the home goes on the market.

Get some legal advice from a local attorney if you don’t feel you completely understand the terms and implications of your listing agreement before you sign it and before you set the list price of your home.

3. Don’t list your home at a price you’d be upset to receive for it. The savvy sellers who list their homes on the low end to generate multiple offers are not listing their properties hundreds of thousands of dollars below their fair market value, or even making them the lowest-priced home in the neighborhood. Smart, aggressive pricing is listing a home at what seems like the low end of the range of comparable-supported prices or a slight discount from that — about a 2-5 percent discount, not 40 or 50, or 70 percent.

Many sellers are OK with taking the risk that their home might sell at 2 percent below the comparables as a trade-off for the opportunity to generate multiple offers and the possibility of receiving a premium sale price. And if you are a seller considering listing low, you should be aware of the potential trade-offs, and should make that decision only if you have market data to support the fact that this strategy makes sense in your local market.

To be crystal clear, as a seller, you should not list your home at a price you would be upset about receiving or unwilling to accept.

And remember that “listing it low” is a strategy that has proven to be successful for people specifically aiming to generate multiple offers in the many markets that currently support multiple offers. If your objective is simply to sell your home — period — in a down market, for example, then this may not be the route for you to take.

Every market is different, and every home and seller is different. If your market is still very soft or you don’t see any multiple offers happening in your town, you may not be able to generate loads of offers no matter what you price your home at. As always, work with your agent and take a long hard look at your local market dynamics before deciding on a pricing strategy.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

Four steps to buying a house in 2012

Q: I am on a mission to buy a home. I’ve wanted to own a home my entire life, and thought I would miss the opportunity to buy while the market was down, because I had no real savings when the market crashed. I think I’m ready, though, and prices still seem low. What should I be doing now to make this happen in 2012?

A: The recession has done lots of favors for buyers-to-be, including dropping prices and interest rates to bargain levels. But it has also created a lending and housing market climate in which loans are tough to get, tensions about buying into a down market run high, and transactions are harder and longer to close than they have ever been.

Here are the things to do now, to buy a home this year:

1. Fix credit problems. More deals than ever are dying on the vine, and credit problems are a top reason home-sale transactions fall out of escrow. Detect and correct errors on your credit report now by reviewing the federally mandated free reports you can get at AnnualCreditReport.com.

2. Study up. Do some research, both online and offline, into things like:

Areas: Start your online research into decision points like tax rates, school districts, neighborhood character and even prices in various areas. Check out NabeWise.com for some local insight into neighborhood flavor and personality.

When you start connecting with local agents, ask them to brief you on neighborhood market dynamics. They can give you a deeper view into need-to-knows like how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search vis-à-vis what you have to spend.

Agents: This is the perfect time to ask your family and friends for a referral to an agent they know, have used and love. Then, follow up by doing an online search for the agent’s name and seeing what sort of online reviews and activities you find. When you’ve narrowed the field down to a few, call them up and set up a meeting to find out if you’re a good fit.

Distressed properties: In some areas, more than 40 percent of the homes on the market are short sales and foreclosures, and they involve a very different timeline and set of facts than traditional home sales. Read up and talk with the agent candidates you interview about what you should expect from these types of listings, to minimize surprise and manage your expectations way in advance.

3. Save even more. Sounds like you’ve worked hard for a number of years to save enough cash that you think you’re in the clear when it comes to funding your down payment and closing costs. Studies show that after months of saving, people often let up and relax into a spending season. Even at your early stage in the process, it’s easy to start noticing and buying the furnishings and touches you want to install in your new home.

Although you shouldn’t feel deprived or forgo amazing and affordable deals on things you know you’re going to need, rest assured that no matter what amount of cash you have on hand, when you start house hunting, making offers, closing your transaction or moving in, the time will definitely come when you’ll wish you had more.

You might want to ratchet up your offer a bit to best another buyer, or you might just end up with a place that needs a little sprucing up. It might be months before you know exactly what you’ll need extra cash for, but now is not the time to press the gas pedal when it comes to your monthly spending.

4. Purge. Now’s the time to sell, donate or give away as much of your personal possessions as you can. Use the proceeds to pad your cash cushion, or tuck the donation receipts away for your tax records next year.

Start here, and chances are good that your house hunt — and purchase — will be in full swing by spring, if not sooner.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

Cash is king in today’s housing market

In these financially uncertain times in the housing market, all-cash sales are attractive offers to homesellers, but come with a condition–they usually must settle for less. In a typical housing market, if your home receives multiple offers (from prospective cash-carrying and/or those pre-approved for a loan), you will accept the highest bid.  But in this current market, mortgages can be hard to come by, and sellers often will take less in order to have the deal go through. 

The outcome: lowering prices despite fewer listings and rising demand.  According to the Star Tribune’s article below, the increased amount of cash offers is offsetting other postive trends that, if there weren’t these cash offers, should lead to higher prices.

All-cash offers in today's real estate marketThis all-cash trend is especially prevalent in distressed sales, where investors are the main buyers, and who typically deal with cash as it is. Short sales and foreclosures accounted for 42% of active listings last month, on average in metro areas. Read more about what the Star Tribune has to say on this topic in their article below:

In today’s topsy-turvy housing market, cash rules

Financing uncertainties make those cash offers alluring, but sellers often must settle for less money to guarantee a deal.

When Chris and Diane Finney decided to buy a bank-owned condo in St. Paul, they knew there would be competition.

Their strategy? Offer less — but offer cash.

While others said they would pay more, they needed to finance the deal. The bank took less and took the cash.

“We were in the driver’s seat,” Chris Finney said.

In a normal housing market, multiple bids usually lead to higher home prices, and the highest bid wins. But when credit markets are tighter and appraisals are often lower, many sellers will take less to be sure that the deal will get done.

“If I get five offers on a property and the cash offer is darned close to being one of those top offers, I’d take the cash offer any day,” said Marshall Saunders, owner/broker at Re/Max Results.

In December, 33 percent of all U.S. home sales were cash deals — a record since the downturn started in 2006, according to Campbell Survey and Inside Mortgage Finance. As a result, home prices can’t gain much traction because many sellers won’t necessarily accept the highest offer.

For most home buyers, it’s confounding to be rejected because they are financing the deal. For the housing market, it means more downward pressure on prices despite tight supplies and rising demand.

“It’s a real sign of what’s going on,” said Guy Cecala, publisher of Inside Mortgage Finance. “All things being equal, cash wins.”

The volume of cash deals is offsetting other positive trends in the market that should be leading to higher prices. The number of houses on the market has fallen to an eight-year low, and sales are up double digits. At the same time, home prices continue to fall.

At least a third of all homes sales last year involved an investor, Cecala said, and they often pay cash…

Read more of this article from the Star Tribune: “In today’s topsy-turvy housing market, cash rules.”

Examine Features Now To Sell for a Good Price Later

Home for saleWhen you buy a home, chances are high that you will eventually sell as your life changes over time. In the United States, it’s estimated that homeowners change residences every five to seven years.

So when you are house hunting, it’s important to keep resale value in mind. Some features you may find desirable may not appeal to others when the time comes to put the house on the market. That would hurt both your ability to sell the house and to get a good price.

As you start your search, consider these factors that will affect resale value:

Exterior Features

Location: If you find the property that offers most of the features you are looking for and it’s going for a bargain price, don’t rush into it. There may be a reason the house is selling for a bargain, so carefully consider where the property is located. When you resell, for example, couples with small children are likely to be searching for quiet streets, large yards and proximity to shopping and schools. Rectangular lots generally sell better than oddly shaped or awkwardly situated properties. For many buyers, the determining factor is the neighborhood.  A home in a safe area will always fetch a better price than the same sized home in or near a less desirable neighborhood. In addition to a low crime rate, many buyers are also looking for a high-achieving school system.

Maintenance: A beautifully manicured lawn with landscaping may have curb appeal, but it is likely to be expensive and time consuming to keep up. You may be willing to pay a premium for it but the next buyer may not. A house with little to moderate landscaping generally has the best resale value. More buyers will also choose a home with exteriors, decks or patios that are made of low-maintenance materials.

Swimming pools: Pools can pose resale problems. Safety concerns means families with small children generally avoid them, as do buyers in regions where a pool is used only a few months of the year. Buyers will also be aware of the maintenance pools require. Keep in mind, however, in some upscale neighborhoods a pool is almost considered an essential.

Size: Resale value is also affected by the size of surrounding homes. Don’t buy the largest home in the area — a large house in the midst of smaller houses generally will sell for a lower price than if it is surrounded by homes of a similar size. Conversely, small or medium-size homes near a larger dwelling tend to increase in value.

Interior Features

Bedrooms/bathrooms: Homes with at least three bedrooms usually have good resale value. The price goes up if the master bedroom has its own bathroom. In any case, the home should have at least two bathrooms and they should be updated for resale purposes.
Kitchens: The center of many homes is the kitchen, which makes it the most important room in the house. Look for modern appliances, a large pantry, plenty of cabinets, attractive and spacious counter tops and adequate dining space. If there is a family room or dining room, the kitchen should be nearby.

Storage and space: In general, lots of closets and well-organized storage space will entice buyers, as will plenty of natural light. Walk-in closets add to the appeal, and garages boost resale value, particularly if they fit two cars. A separate laundry room is typically a great resale feature.

Character: One all-important aspect that will help sell a home is its character. A home’s distinctiveness, however subtle, can charm a buyer. Small touches such as granite counter-tops, French doors, an antique fireplace, or a picturesque view through a bay window can often cinch the deal. The more character your home has, the higher the resale value.

When buying a home, it all comes down to this: Purchase a house that suits your immediate needs and desires, but keep an eye on its resale value. You’ll reap the rewards when it’s time to move on.

This article is by BizActions.