Set a personal reserve
FOR those of you who don’t tune into the Lifestyle Channel on Foxtel to watch Selling Houses Australia every week, I firstly ask why not?
We’ve won awards and were the highest rating non-sports show across Foxtel in 2013.
If you don’t watch, you would have missed a recent episode where the question “should you have accepted that first offer” scenario raised its ugly, but oh so common head.
That first offer can be anything from a realisation you really could be on the move, to total disgust that anyone could ever be so rude to think you would even consider it.
It could be an offer within hours of your listing going live or the first one received in months, maybe years.
Whatever the scenario, what do you do?
There is an analogy that often your first offer ’ is the best – I wish it was that simple.
For those of you selling at auction, generally it is almost never an issue when offers are coming in thick and fast, and the first one is a distant forgotten starting figure. With the auction, where even the bribe of a bottle of cheap wine can’t entice any real offers to come to the fore, again any figures in that situation are not really relevant.
However, that first offer after the failed auction can fall into this category.
If you are selling by private treaty there is no doubt that first offer can cause some serious reasons for stress. The timing of that offer has an impact too.
For example, if the offer is received very quickly in your marketing campaign it is easy to feel nervous that you haven’t allowed enough time and a higher offer could just be around the corner.
The opposite can be the case when, after long periods of a total lack of interest, an offer is suddenly forthcoming.
It can be so tempting just to bite off the buyer’s hand.
I have witnessed on many occasions in my 24 years as an agent, the regret sellers feel for dismissing that first offer.
So what to do? I have two clear points you should consider
Firstly, set your own personal reserve, share it with no one, but be realistic – establish a value figure that would make you happy to enough to sell up.
Yes, get the agent’s opinions, undertake your own research by looking at the ads and searches online.
If there is a particular home or homes you know have sold recently that you believe compare to yours, Google their address with the wording “sold price for …” and quite often the information you want will pop up on your screen.
Even better, spend a little and pay to access detailed sale data for your suburb.
For example, perhaps you decide $500,000 is the figure you would be happy to sell at. If you receive an offer of this amount or below in a matter of days maybe you should consider pushing for more or being prepared to walk away from the deal.
Alternatively, maybe months down the line the first offer finally is forthcoming, but only at say $480,000.
I would suggest a little negotiation initially, if that fails, maybe consider it seriously.
But if very quickly you receive an offer of $510,000 you know that your acceptance is worthy of real consideration.
Without your personal reserve you simply will have no benchmark to work with.
It is true the longer the home is listed, unless the market is booming, waiting doesn’t necessarily add value. It can reduce buyer appeal, as purchasers will feel no sense of urgency or competition.
Secondly, from the beginning understand the value to you of a sale, not just the sale price but the value to you in being able to move on, perhaps you have already bought your new home, selling to clear debt, down sizing playing the waiting game for a particular figure can occasionally cost you more than refusing what you considered a disappointing first offer.
There is also a personal value, moving on for wellbeing and a lifestyle change can sometimes simply not justify hanging out for a certain sale figure.
It can be difficult to analyse the value or cost of a “sale now” situation compared to continuing to play the waiting game, but in my experience it is amazing how often I have seen the wait either prove fruitless, or at best, a break even situation occurs.
So please set your personal reserve and understand the true value of a sale is not always purely about the monetary figure.
As for our recent episode our sellers had done exactly this and set a realistic reserve, within days the first offer came in at $10k higher.
Realising buyer interest levels were high and they had time they played a brief waiting game and bagged another $15k over that.