You’ve prepared your home for sale. You’ve appointed your estate agent and your home is on the market.
Then you receive an offer..
One of the most common dilemma’s when selling a property is how to respond to an offer when a potential buyer comes forward with an offer.
An accurately priced property based upon the various factors that determine the market value will receive offers very quickly from the first day of marketing and subsequent viewings.
The ideal scenario is that potential buyers want your property so much that they compete against each other and offer the asking price or above. Competing buyers wanting a desirable property will often drive the price up again and again.
Our Four Stage Process
We have a four stage process that we adopt when considering any offer.
Bear in mind that it is a legal obligation for an estate agent to pass on every offer that is received on a property to the vendor, however silly that offer may be. Agent and vendor should then discuss the response before the agent goes back to the potential buyer.
There are a number of factors to consider aside from which buyer is willing to pay the most money.
1 – The Buyers Situation
Your agent needs to give you as much information as possible about the people making the offer.
Establishing whether they are a first time buyer, an investor or part of a chain is of course a major factor in weighing up the attractiveness of any offer. The longer the chain the more potential there is for something to go wrong so this needs to taken into account when weighing up the attractiveness of an offer.
If they do have a property to sell, is it on the market? How long has it been on the market? What are the chances of it selling based upon its price?
Depending upon your own circumstances it might be that a slightly lower offer from a chain free buyer might be more tempting then a higher offer from a buyer in a long chain.
2 – The Buyers Finances
Is the buyer actually in a position to pay the amount they have offered? Do they have a mortgage offer already approved? Are they a cash buyer?
A good estate agent will obtain proof of the buyers finances and fully check the details of any chain that they are in.
It is very common for sellers to take their property off the market and agree an offer only to find out weeks down the line that their buyer is not able to actually raise the necessary funds.
Until it is established that the buyer is able to raise the funds they need for the purchase, then any offer is irrelevant.
3 – Level of Interest
An important part of considering an offer is also considering the level of other interest you have had on your property.
If your property has only been on the market for a few weeks and you are still getting lots of viewings then it may be that you can take a harder approach than might otherwise be the case. Having said that, generally a lot of the best interest will come within the first few weeks of marketing as your property hits the portals and peoples smart phones light up will alerts of new properties to the market so don’t dismiss an offer just because your home hasn’t been on the market for long – especially if it is for the asking price!
4 – Is That Your Best Offer?
Negotiating an offer is where your agent should earn their fee.
If you have chosen well, your estate agent should attempt to maximise the sale price for your property as well as identifying the most suitable buyer. Beware agents who simply want to sell the property as quickly as possible as a higher number of sales fees are more profitable than a marginally higher sales price on one property.
Your agent needs to know exactly where you stand and your own circumstances in great detail as there are numerous negotiating tactics that they should employ.
As you are selling, you probably won’t want to accept an offer below your asking price. However, buyers usually expect back and forth negotiations, so, their initial offer will often be lower than the asking price but it may also be lower than what they’re actually willing to pay.
Counter Offer at the Asking Price
At this point, a lot of sellers will counter-offer with a price that is higher than the original offer but still below the asking price as they are afraid of losing the potential sale. They want to seem to be willing to negotiate to close the deal. This strategy does indeed work in terms of getting the property sold, but it’s not necessarily the best way to achieve the maximum sale price.
So, instead of reducing, counter with the asking price. A buyer who really wants to buy will stay engaged and come back to you with a higher offer. Assuming that you’ve priced your property fairly to begin with, countering at your asking price says that you know what your property is worth and you intend to get it!
Some buyers may be surprised and some will walk away. However, you will filter out the time wasters who make silly offers and won’t agree unless they can get a bargain.
A slight compromise is to counter just slightly below your asking price – maybe £1000 or £2000. Use this approach when you want to appear to be tough but don’t want to appear too inflexible so not to lose a potential buyer.
For a Limited Time Only
As you are actually trying to sell your house and not simply negotiating for the sake of it, you could consider putting an expiry date on your counteroffer. This forces the potential buyer to make a decision so you can either get your home sold subject to contract or move on.
Keep the time period reasonable so that the buyer doesn’t thing that they are being forced into a corner but don’t make it too long either as whilst your counteroffer is outstanding, your home is effectively off the market. Many buyers won’t submit an offer when the property is showing ‘Sold Subject To Contract’ on Rightmove. Plus, if the deal falls through, you have increased the overall transaction time to complete your sale.
The more days your home is on the market, the less desirable it appears, and the more likely you are to have to lower your asking price to get a buyer.
Reject the Offer Completely
This is a more gutsy approach! Reject the buyer’s offer… and don’t counteroffer at all.
Ask them to submit a new offer. If they are genuinely interested and you haven’t scared them off, they will submit a new offer.
This is you confirming that you know your property is worth what you’re asking for.
If a new offer comes in, it will undoubtedly be higher that their original offer, unless they decide to adopt your hardball tactics and submit the same or even a lower offer!
The advantage of not countering is that you are not in any sort of negotiation with a particular buyer, and you can accept a higher offer if it comes along without being accused of ‘gazumping’ anyone. For the original buyer, knowing that someone could make a better offer creates pressure to quickly submit a more realistic offer if they really want the property.
We would only suggest using this strategy if the property has only been on the market for a short time.
A Desirable Property
The secret to implementing any of these negotiating tactics successfully is that your property needs to be desirable and looking it’s best.
If your property doesn’t have that something extra to generate interest above competing properties, then some of these tactics simply won’t work. If buyers aren’t excited about your property, they’ll just walk away.
If you wish to speak to one of Sales Team about selling your home, please call us on 01332 300172.