Selling a home is an exciting experience, but it can also be a scary one. Buyers are out there trying to get the lowest price possible. The Australian property market initially got off to a shaky start this year, however it seems to be steadying as the year goes on. You, as the seller, obviously want a fair bid on your home. To avoid getting low-balled, you have to play a game of chess with the buyer.
The problem is, how do you really know when you’re winning? You don’t, and that may be the problem. Don’t try to “beat” the bidder. Instead, focus on making a fair deal so that both parties walk away winners.
Is The Buyer Knocking Down the Price?
A buyer trying to knock down the initial offered price is very common in real estate transactions. Some buyers will have a home inspection done, find out there’s something wrong with the home, and then ask for a discount on the house before the sale. This can be a double-edged sword though. Let’s say you have ducted heating that’s playing up. Maybe it only needs a couple of hundred dollars to fix or service, but the buyer asks you for $5,000 off the price for a new system.
Image courtesy of businessweek.com.
Expect buyers to bid low when there are problems with the house. Be honest with yourself – and be proactive. Fix any major issues, and consider fixing minor issues before you set your initial offer. If you’ve already listed your home, and are getting a lot of offers with buyers asking for credits, take the home off the market. Then, fix the issues with your home and re-list it. You’ll get better bids.
Did You Set Your Initial Offer Too Low?
It’s tempting to set your price low – especially if you’re in a hurry to sell. However, this can be a huge mistake. Take a look at what homes are selling for in your neighbourhood. If you see homes selling for $600,000, don’t price yours at $580,000. Even $600,000 might be too low. Always expect buyers to negotiate. If you ask for $600,000, expect offers in the $550,000 range. They may ask for 3 per cent off. They may ask for 5 per cent off. Generally, anything more than 6 to 9 percent is getting going to be ridiculous in terms of bidding (most of these offers aren’t serious anyway).
Image courtesy of 123franchising.com.
In a seller’s market, it’s easy to under-price your home. If prices are trending up 7 per cent annually in your area, set your initial price at 3 to 4 per cent above current market rates for a quick sale and 7 per cent above market rates if you want to maximise on potential profits.
Does The Offer Meet Your Objectives?
Even if you do get a low initial offer, there may come a point when you have to consider what your financial goals are. Can you buy your next home with the money you’re being offered. ? Maybe you didn’t make the profit you had hoped to. If you’re in a buyer’s market, as is the Ccase in most Australian capitals at the moment, prices tend to favour the buyer – by definition – so you can’t expect to make a huge profit.
What’s important is that you make enough money to meet your financial goals after the sale. If you can buy your next home, make a down payment, invest in stocks, or retire, that’s what counts. In that sense, “fair” is relative.
Cover image courtesy of thestar.com.
Author bio:
Sarah Gregory is a property consultant and currently works for domain.com.au, part of the Fairfax Media Network and is one of Australia’s leading destinations for property seekers. Her articles mainly appear on Australian real estate and property blogs where she enjoys sharing her knowledge. You can add her to your Google+ circles:+Sarah Gregory.