02 Oct A Bird In Hand
As the saying goes a bird in hand is worth two in the bush (what does this really mean?).
Well, I will tell you. Recently, a client of mine listed their home for sale in Fremont. His neighborhood is wildly popular with homes selling within the first 5 days of hitting the market, 10% to 30% above asking. Why so hot? LOCATION, LOCATION, LOCATION! The home is a commuter’s dream come true (Calling all Facebook employees, Google engineers and tech folks along the peninsula) Less than a ½ mile from Highway 880, 1 exit from the Dumbarton Bridge, 2 exits from the San Mateo Bridge and a few minutes from BART. To top it all off the home is zoned for one of the most desirable high schools in the entire city of Fremont.
While awaiting the date to review offers, my very motivated seller asks to tour homes. We look at a few, some good, some not as good. My client is retiring and wanting a change in lifestyle, so he is relocating to an area that is more affordable. The temperature of the market in his chosen city is red hot for well equipped and well-priced homes (a 20 year old remodel need not apply). We come across a home that has been renovated from top to bottom, with rolling hill views and a sparkling pool. My client loves it (we spend 2 hours touring the home performing imaginary decoration and space planning). My client writes an offer but we have some challenges, (say it ain’t so)! My client has to write his offer contingent upon the sale of his home, he has a non-traditional earnest money deposit, and we are writing less than the asking price. Less than asking in the Bay Area, is that possible you ask? YES under the right circumstance, absolutely!
The seller at house number one has priced their home too high and the home has been sitting on the market for more than a week compared to its recently sold counterparts. The real estate agent, (bless her heart), is trying to justify the time and price, meanwhile open house after open house brings in no new prospective buyers and online syndication yields no new prospective buyers as well.
We submit our less than expected offer with the terms suitable for both my client and the seller (bird in hand) and the seller counters the offer with very unreasonable demands and takes two days to respond (mind you, this is the only offer the seller has seen since listing their home).
Another home has just lowered their price in the area; larger, newer, and a killer view. What’s a buyer to do? Well my client decided to go for the better investment of the recently price reduced home. What about house number one? Well, seller number one asked for reconsideration of my client’s original offer and when my client declined the seller held another unsuccessful open house and then reduced their asking price by $40,000.00.
YIKES! (No two in the bush)
There are two very important points here ONE My client was reasonable with their offer and though they loved the home they recognized that there are other homes that can be the “one,” and making a sound financial decision ensures they will be happy and satisfied with their next move. TWO The seller learned that when you have only one offer on the table, negotiation is a “collaborative effort” to get what you want (a sold home, no one likes paying two mortgages); it is not wise to trip over nickels to pick up pennies.
I often tell my clients buying and selling a home has very little luck involved. Buyers and sellers have to be ready to make logical and reasonable decisions based on proven data combined with market trends. Listing a home above market because you believe that is the direction the market is going is a sure fire way to ensure you will sell your home for less than market value. Having challenges with an offer to buy may be a buyer’s present reality but be certain you can thoroughly explain those challenges. Intelligent, reasonable sellers will get it, emotional ones won’t