Friday, April 15, 2016
Pricing is Erratic on New Listings
Some agents are utilizing the classic 'auction' approach with a seemingly low list price and multiple offers on day one. This can be effective but only if the house is really clean and truly move-in ready. There is always the risk of not getting the highest offer possible using this technique but for some sellers it's about a quick sale and this can be effective. These types of scenarios will often land a back up offer so the seller can bid on another property with confidence that the current property will sell.
Some agents are listing high, way high in some cases, in hopes of getting that desperate buyer that has been outbid several times and is ready with a high offer. Sellers need to be prepared for a soft appraisal and the possibility of having to reduce the price later in transaction.
Buyers need to know where the listing is in the market place before presenting their offer. The buyer's agent needs to give sound advice or the buyer may not get the house they want. If the seller is priced to create a multiple offer 'auction' environment then the buyer needs to come in strong with their offer. Some buyers have a hard time bidding a house way up above asking but that is the nature of a robust market. The buyer's agent needs to research the market and determine where the house is on the price scale.
If the house is priced up high, the buyer can use that as a means to soften the seller or get the seller to agree to concessions such as closing cost credits and such. All of these variables will determine the way the buyer needs to present their offer to get the best deal for themselves and most importantly get the house they want.
Some buyers need help with closing costs and often they puff up the offer price and ask for seller concessions. This may work but the appraiser may not bite. Sellers need to be wary of 'over-puffed' offers.
In the end, no one truly knows how the transaction will unfold. There are many variables in a real estate deal and buyers and sellers always need to be prepared to encounter some turbulence during the process. Buyers need to follow the counsel of their loan officer to a 'T'. There is no room for screw ups in the loan process and there is a good chance a back up buyer is in place should the buyer stumble.
Buyers need to realize that trying to "steal" a house in this market will almost certainly cause them to ultimately pay more for less house. I have buyers that can't seem to get the notion that they have to bid good houses up and as they wait, prices rise. We are seeing price move up at about 1/2 to 3/4 of a percent each month. That may not seem like much but on a $300,000 house a 1/2 point increase is $1500. A buyer that takes three months to buy a house will spend $5000 more than if they get aggressive now and get the house they want sooner rather than later. The market is cold and cruel and cares not about anyone's hopes, dreams, and ambitions. As prices creep up buyers lose purchasing power and sometimes are priced out of the market altogether.
Choose your agent wisely and he or she will get you the best opportunity to buy or sell a home.