Tag Archives: sell your home

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.

It’s safe to sell your home again

It’s safe to sell your home again
While analysts debate when the housing market will hit bottom, for a surprising number of cities the turnaround has already begun.  In December, prices rose in 109 of the 384 metro areas tracked by data firm CoreLogic. 

Making sense of the story

  • There are certain signs to help determine if a particular neighborhood is on the verge of a rebound.  For instance is local employment on the upswing?  That’s a critical factor for a region to get itself on the path to recovery.  Improving jobs picture has led to shrinking housing stock across the country, as investors and bargain hunters have started buying up foreclosures that have been preventing a recovery.
  • For years, buyers were scared of overpaying for a home, but less so now.  Many buyers have grown accustomed to thinking they’ll score deals, so they tend to act slowly, and typically start bidding around 10 percent to 15 percent below list price.  However, a growing number of buyers are beginning to realize that if they wait too long in this market, they may miss out.
  • Sellers can hold firm on price if they’re patient.  The days of having to deal with low-ball offers are coming to an end.  The higher the price, the more patient the seller must be.  Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there. 
  • Sellers should keep in mind that while they don’t have to placate low-ball offers anymore, they also can’t shoot for the moon either.  Working with a REALTOR® and setting a realistic price from the get-go is key.
  • Sellers should know what they’re competing against.  Homeowners should let their home’s value dictate the price.  While this may seem self-evident, some owners may have lost sight of it during the bust.  On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high.  Others may have gone too far the other way, and set their price too low.
  • It’s also important that sellers understand they’re no longer competing with gutted foreclosures.  Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up.  REALTORS® often report their clients are willing to pay a little more for a home that’s ready to move into.

Read the full story from CNN here: http://money.cnn.com/2012/04/19/real_estate/housing-market.moneymag/index.htm?iid=HP_River