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How to Educate Buyers to Make Good Offers

February 11 2016

graph 1

As Realtors®, you see this again and again. As a listing agent, you are required to submit all offers to your seller, even the lowball offers. It is a horrible situation for the agent. Indeed, it is probably a horrible situation for the buyer’s agent, too. It is embarrassing for a buyer’s agent to submit a lowball offer to a seller.

As the listing agent, you need to reinforce the price. Respond with the data that was used to set the listing price. You did a CMA, just update it with current comps. When you counter to the buyer, include the facts that support your pricing. The buyer’s agent is unlikely to argue, especially if you are drawing those facts from the same MLS.

Another piece of information that you may want to include is the graph showing the sales price as a percentage of the Original Price. The graph above is a good illustration of this.

Real estate professionals understand that there is seasonality to pricing. You can see that the spring market is hotter for sellers than buyers. The buyer market gets slightly stronger in the fall, and is red hot over the holidays.

Get People Off the Fence

February, the month of love, is a balanced time for buyers and sellers to meet in the middle. This graph illustrates this for the east bay of San Francisco. It is different in every market. Encourage your buyers to make reasonable offers at this time of year if they want the house.

Lowball is a Bad Tactic

There are two tactics that never work in real estate. The first is pricing too high. If you use Broker Metrics from Terradatum, you will find that homes that are overpriced when they are listed will take longer to sell and will sell below market. High asking prices lead to the lowest transaction price. Conversely, low asking prices lead to higher sales prices. Buyers and buyers agents know a good deal when they see one. A property priced below market creates a feeding frenzy of offers and counter offers that wind up stimulating an auction-like bidding euphoria. Everyone wants to “win.”

The second tactic that does not work is a lowball. It freezes the seller and challenges the relationship between the seller and the listing agent. It causes doubt and frustration. Reasonable offers are the place to start. Never use the tactic of trying to “steal” a house with an irrational offer if the buyer really wants the house.

Buyer's agents should spend some time educating their buyer on the best tactic to win the home they are looking for with a good strategy for success.