By Dian Hymer
Recently a seller received offers from three different buyers. All of the offers were for more than the asking price. The seller still felt that the offers weren't high enough, so he decided to wait for a better offer. Another seller was presented with an offer for his asking price. He also decided not to respond and wait for another, better offer.
Were these sellers smart or foolish? Only time will tell. Several months ago, a seller of a home in Oakland turned down several offers before a buyer made an offer she liked. She was certain her home was worth more than she was asking. She was right.
Determining market value is not an exact science. Generally, the market value of a home is the price a willing and able buyer will pay. How much a buyer will pay at any given time depends on a lot of conditions: current interest rates, general economic conditions, the condition of the property, the housing supply, and the buyer's financial situation, to name a few. The conditions effecting market value are in a continual state of flux, so market value is always changing.
The most common way to determine market value is by a comparative market approach. This involves comparing the property in question with similar properties that have sold recently. This approach works better in some markets than it does in others. When the market is relatively stable, it's easier to accurately establish market value because prices are changing slowly. When values are changing rapidly, yesterday's prices are often out of date-by how much is a matter of guesswork.
First Time Tip: When the real estate market is strong and home prices are rising, there may be minimal risk in waiting for a higher price. That is if there are plenty of buyers and the listing inventory is low. However you may alienate some agents and their buyers if you get a reputation of being a seller who is hard to work with. Also, markets can change quickly. You usually won't know a market has turned until after the fact.
When home prices are declining, however, it can be very risky to hold out for a higher price. The longer your home stays on the market, in a down market, the lower your ultimate sale price is likely to be.
Several years ago, a seller in Piedmont, received an offer that he felt was too low. The buyer refused to pay more because home prices had dropped recently and he felt that prices would drop further. He was right. Several months later, the seller had to sell for considerably less.
It's difficult to be objective about the value of your home. It's disappointing to find out that a buyer doesn't find as much value in your home as you do. But, letting your emotions rule, can be costly.
A good agent can help you to separate your emotional feelings about your home from the realities of the current market place. But, agents are human and sometimes they too can be wrong in their assessment of market value.
One seller had difficulty selling a studio condominium. When an offer did come in, it was for far less than the asking price. The agent was adamant that the seller not accept such a low offer. The seller disagreed and took the offer that was for all cash and had a quick close. Several weeks later, the market skidded and prices started a lengthy decline.
The Closing: There's more to an offer than price.
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