If you were to ask home sellers how they would like the transaction to go, most would probably say that what they would really like is an offer to purchase at close to their asking price, as soon as possible.
However, says Gerhard Kotzé, MD of the RealNet estate agency group, those same sellers will often develop misgivings if their wish is granted and they receive a strong offer shortly after listing.
“In areas where there is strong demand and a shortage of homes for sale, it is not uncommon even now for a good agent to receive offers within a few days of a property being listed for sale – and sometimes even within a few hours. This is especially likely if the seller has worked with the agent to set a highly market-related asking price and the property is in move-in condition.
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“But as most experienced estate agents can relate, the sellers in such a situation will often not celebrate as one might expect, but grumble instead that the asking price was obviously too low if buyers were so keen, and perhaps even say that the agent does not deserve their full commission because they didn’t have to work very hard for the sale.”
In some cases, he says, the sellers will even withdraw their property from the market to avoid having to accept the offer, and then re-list it shortly afterwards at a higher price.
“Sadly for them, this tactic usually doesn’t work, as informed buyers will compare the property to similar homes in the same area and be put off by the fact that it is now overpriced. No offers will be forthcoming until eventually, frustrated at being unable to get on with their plans to move, the sellers have to cut the price anyway and accept an offer that is probably actually lower than the original one.”
In short, says Kotzé, sellers should not be too hasty to believe that a quick offer means their asking price was too low.
“What it is more likely to indicate is the increasing efficiency of the real estate marketplace. These days, technologically capable agents are able to give many prospective buyers almost instant access to new listings – and savvy buyers are quickly able to evaluate and act on a competitive asking price.”
A quick first offer that is slightly below the asking price should not be rejected out of hand either, he says, but should be viewed as the starting point for negotiations.
“In the current market conditions, buyers are much more likely to test the water by offering slightly less than they are really prepared to pay, and skilful negotiation by an experienced estate agent may well result in second offer that will satisfy the sellers – and allow them to get on with the job of finding a new home.”