Our high-end executive home has been on the market since last fall. It’s one of the nicer houses in an exclusive neighbourhood. We initially got great feedback from our showings, but no offers. We dropped the price and had another wave of showings, but still no “serious” offers. We recently got a lowball offer which we don’t think justifies a response. Our agent wants us to sign it back. What’s the point? – STANDING FIRM
DEAR STANDING: I often hear people say “some properties take longer to sell than others”. If you’re sitting on a 30-acre rural Ontario estate priced at $10 million, it may take longer than usual to find the right buyer, assuming of course that the $10 million price tag is an accurate reflection of the property’s market value.
I often take time to review the last 30 days of local real estate transactions. These include all sales, from starter homes to high-end properties. Price aside, the most noticeable difference between high end and affordable homes is the average number of days they spend on the market. Selling times typically range from a few days for lower-priced homes, to several months for top-tier properties. A familiar pattern often emerges: the high-end homes that sit on the market the longest will tend to sell after several price reductions. If a property with a market value of $2.5 million is listed for $3 million, it’s not going to sell because the people searching for $2.5 million homes won’t see it. It’s being shown to the wrong buyers.
You don’t walk into a high-end steak house looking for a takeout burger. Likewise, home buyers tend to shop within a predetermined budget. If your home is overpriced, it’s not being properly exposed to the market because you aren’t reaching the right buyers. If you adjust the price and see an increase in traffic, you’re likely getting closer to market value.
Sellers are sometimes embarrassed when their house doesn’t sell, or offended when buyers don’t see the value that they do. Instead of approaching things emotionally, treat the negotiation like a business transaction. If someone has gone to the trouble of drafting an offer on a high priced home, it’s worth taking the time to see if the contract can be negotiated to a price that makes sense for both sides. Many seemingly “lowball” offers come together with a little bit of effort, which doesn’t mean the seller ends up taking a price below what they find acceptable. It just means they let the buyer try something on for size.
PRO TIP: If a buyer submits an offer and receives no response, there is zero chance of the deal coming together. Attempting to anchor a negotiation with a lowball offer can be effective in business, but it can derail a real estate deal if emotions come into play. Take a breath before tossing it aside. You don’t want to rule out something that could turn into a great offer with the right skill and expertise. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.