Whenever I take a break from writing, I really miss hearing from all of you so I am pleased when you write to tell me that you missed me as well. Or to quote one as my youngest fans (he's only two-and-a-half!) "Juie, I mythed you." Which got me to thinking about some of my favorite real estate myths -(I'll limit these to "selling myths" this week and share "buying myths" with you next week.)
MYTH 1* - "It only takes one Buyer!" I often hear this phrase from hopeful Sellers, prior to placing their home on the market (usually for more than the listing price I have suggested). Yes, it's true - it does only take one Buyer to sell a home - however, it may take two Buyers to get your list price and it may take three to go above it.
In today's marketplace, it may take many more than that - which is why your local Realtor often encourages you to list your home aggressively. (An aggressive list price is designed to attract more than one buyer!) Conversely, if you haven't received a full -price offer within the first two weeks, you aren't likely to get it.
Even with multiple offers, your home still may not go above asking in this much more conservative marketplace. Recently, a solid Mid- Century listing with bay views, sold well below asking, even though it had received several well-intentioned offers on its predetermined date. It closed for more than $150,000 under its retail price (not an infrequent scenario these days)!
What happened there?
The market clearly disapproved of the price, judged it too high and came in with a more appropriate estimation of the home's true market value. (Remember, the value of your home is what a willing and able Buyer will pay for it in any given market.) If three or four offers come in well below asking, it's time to adjust your expectations. Your home just found its real "market" value. (Don't forget that there is a difference between "intrinsic" value and "market" value.)
*There are exceptions to every rule. Truly exceptional homes may in fact, receive an offer above asking with only one Buyer! In this instance, the Buyer recognizes value and puts forth a strategy to dissuade the seller from entertaining any other offers.
MYTH 2 - "That's only the first offer, I'm sure the second will come in higher." Not usually. While there are a few bargain shoppers out there who make a habit out of throwing low ball and unrealistic offers at every home that strikes their fancy, the adage that "the first offer is usually the best," is as true now as it has ever been.
The first Buyer does typically represents the most enthusiastic, and motivated Buyer and is usually willing to pay the most for your home. (The third and fourth typically represent the most realistic!) While you may get lucky with a second or even a third offer, counting on "luck" to achieve a higher end result is not the wisest strategy.
It's not unusual to hear a neighbor say: "Did you hear that the offer they finally accepted was far less than their first offer?" Think long and hard before sending away your first Buyer and avoid becoming a cautionary tale!
MYTH 3 - "I'll take it off the market and get more next year when the market recovers."
Maybe, maybe not. No one can predict where the market will be next year. Market indicators suggest a 3 - 5 year recovery at best. You could find yourself netting far less.
MYTH 4 - "My home is worth more than my neighbors' home."
Unless it is substantially larger, recently remodeled, or very well appointed, it probably isn't. Taste is largely subjective. What you view as special, may have little or no value to someone else. Even if it is "more special," your neighbor's sale two doors down, just set the new comparable for the block - and that's what today's Appraiser is basing his/her appraisal upon. Even if you pull a rabbit out of the hat and actually get your "dream price," will the recent neighborhood sales support that value? Probably not! (Expect a renegotiation on the price in that scenario).
Myth 5 (and my current favorite) "Nobody's showing any interest, so we don't want to lower the price." Huh?
No one's showing any interest BECAUSE the price is too high. Here the Sellers are making the assumption that some other unidentifiable reason is keeping Buyers away. Let me assure you that EVERYTHING will sell at the right price - everything! List price is always relevant!
The constant with each of these myths is "ego." I'm reminded of the line from the Lord's Prayer (Yes, I've been known to pray) " . . . lead us not into temptation, but deliver us from evil. . ." With respect to real estate, the line should say ". . . deliver us from ego . . ." Here's the skinny, more deals fall apart due to ego than to market conditions (this may be true in marriages as well). Check your ego at the door and you are bound to consummate a good deal!
Look for my favorite "Buying Myths" next week in part two of Did You Myth Me? - and send me yours as well. I'm counting on hearing from you!