One question I often get from clients is:
“How does (fill in the blank) typically work?”
Here are a few specific examples:
- How long does it typically take for a seller to respond after an offer is submitted?
- Sellers won’t typically contribute to a buyer’s closing costs, right?
- Do the washer and dryer typically stay?
- Do sellers typically repair any items in the inspection not up to code?
- Will a buyer typically pay over asking price for a home like mine?
- Homes in my neighborhood typically sell pretty quickly, right?
- …I could go on and on…
Well, I’m here to tell you that there is no “typical” in real estate. Before getting into real estate, I was a middle school math and economics teacher for about eight years. In teaching, there were certainly many obstacles- many of them you couldn’t prepare for. However, most of my day was literally planned out by me or someone else. Our curriculum was planned a year in advance. I knew what lessons I’d be teaching each day; I knew when grades and report cards were due; and if any of my students misbehaved, there were plans of action. Especially with respect to the academic content- there were rules and theorems that had to be obeyed in order to succeed. I mean, none of my students ever asked, “Mr. Raven, if I were to divide 56 by 8, would I typically get an answer of 7?”
|This was on the door of my classroom for a couple of years.|
So, back to real estate! One of the things I love most about this (Realtor) job is that everything is different virtually all the time. Every property is different and comes with its different quirks. Every seller is different. Every buyer is different. Every listing agent is different. Every buyer’s agent is different. Every mortgage lender is different. Of course, the market can change on a dime. Lending laws change all the time. Even the real estate sales contract changes occasionally.
Let’s break this idea down with one simple scenario: I’m sitting in front of a home with my buyer clients and they love it. They say to me, “Barrett, we love it. But we really want to pay $20,000 less than what they are asking. But sellers in this market don’t typically consider offers below asking price, right?”
- In this example, the outcome primarily depends on the seller’s motivation. (e.g. Are they just selling to see what the market will bear? Do they even care if they sell or not? Or did the husband just get a job in Chicago and they need to sell FAST!?) If the seller is highly motivated to get a sale done, they might be willing to give a little on price.
- Is the home priced appropriately? The price of any given home on the market may or may not be based on reality. In my opinion, a good real estate agent should give you an accurate projection of the market price before you ever offer on a home. If it appears the market supports a price $45,000 less than where they are listed, there’s a decent chance a $20,000 price reduction may be successful. Or maybe there are obvious defects present in the home that the seller did not take into account when they listed.
- Another important factor in this scenario is the method and strategy by which your agent presents the low offer. In the end, someone wants to sell their home and someone else wants to buy that home. This is a very cooperative process. There’s no reason to present a low offer in an insulting or condescending way. We are all on the same team here! As a buyer’s agent, I am still helping the seller get their home sold. Of course, I must do this while representing the buyer’s interests. I could write about this particular topic all day. But if my client’s interest is to buy the home for $20,000 below asking, I believe I am much more likely to achieve that for them if I treat the listing agent with kindness and bring data to the table demonstrating that my client’s offer is a reasonable one. (Someday, I will write a post just about this…but this one is getting too long.)
- Of course, there are market factors at play. For example, if the average days on market in a particular neighborhood is 15 days and you are asking for a $20,000 price reduction on the third day, you’re probably not going to get it. But you never know!
- Lastly, there is the financing component. Are you paying in all cash? If so you may be able to get a price reduction. If not, how much are you putting down?
There are even more pieces of the puzzle than this! So, to just say that you can’t typically get this or that is oversimplifying things pretty drastically. What a beautiful process we get to experience together!