I have a client searching for the perfect house for her, her family, and her dog. We recently discussed the offer process…
“How much less do I offer?” she asked me.
Red flags waved in front of my eyes – “What do you mean?” I asked.
“What’s the number less I offer?” she queried. ” Do we always offer a set amount off, like five or ten thousand dollars, or do we use a percentage, like 3% or 10%?”
I shook my head and said, “Sometimes we offer full price. Sometimes we should offer less, if it’s overpriced, and sometimes, in a multiple offer situation, we might wind up offering more. If we always offer, say 10% off of asking with every house you like, you’re going to lose a lot of houses, because that’s not the way it works. Some houses will sell for more, some will sell for less, but we cannot make a blanket policy to always offer a certain amount off.”
She understood, because she’s a reasonable woman, and we discussed earnest money, terms and conditions, inspections, etc.
I know, that in the somewhat recession-proof Tri-Cities, we still have access to news from all over. And in many places in America, there are housing markets that demand a lower offering price, because there are desperate sellers. We’re not one of them.
Buying a house can be a numbers game, and I know that for some people, the bottom line is the only one that matters. But I see my role as not just a negotiator, not just an allay, not just a salesperson, but I’ve got knowledge I want to share. What does that make me? A teacher?
In the Tri-Cities we offer what the house is worth, according the market data. We don’t automatically discount because we think we should, or because that’s what they’re doing elsewhere.
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Does this advice change if you’re a buyer’s agent? It seems to me that you have an interest in the higher price being paid since it impacts your commission. I am not suggesting you personally would take this approach, but it’s something I wonder about so maybe others do. I like your blog by the way. Thanks.
Scott –
Thanks for dropping by the blog, I’m glad you like it.
Re: your question from above – it’s a great question, because an agent DOES make more when the house is sold for more. This is how I look at it – if we’re assuming a 3% commission for the buyer’s agent side, then every $1,000 more the house sells for, brings $30 more to the agent. After the brokerage takes its cut and other associated expenses are subtracted an agent might be left with between $10 and $20 more. Big whoop, right? Even $10,000 more would leave an agent with a couple hundred dollars more than they would have earned otherwise, and a couple hundred dollars doesn’t buy much in my mind.
I suppose if someone urged the client to spend more with every transaction, that agent would have a nice tidy sum at the end of the year. But how much of a career would that person have in the long-term, after word got around that they had a tendency to have their clients over-offer? In today’s very transparent, increasingly consumer-review-driven real estate climate, I don’t think that’s a smart move for anyone.