Selling your home? Price it fairly and you are likely to receive offers. How do you decide whether to accept, reject, or counter offer back to a buyer?
My father was a real estate broker. He was gifted at condensing important concepts into one sentence rules to help me make better decisions. Since my dad’s nickname was Chubby, I call them Chubby Rules. One of the best was, “Smart sellers think like buyers.”
The idea is to change your mindset from seller to buyer when you are evaluating an offer. Ask yourself, “As a dispassionate investor, would I buy my house at this offered price in the hope of making a profit?” It’s a good question because if you don’t accept the offer, you’ve essentially bought your home back at that price. Why? Because if you sign the offer, your house will be sold at that price.
Let’s say your asking price is $495,000 and your home has been on the market for 95 days with no offers. Finally, you receive an offer from a qualified buyer. After negotiation, the most the buyer will pay is $465,000. You were hoping for at least $475,000. What do you do?
Apply the Chubby Rule. Pretend you are a buyer with $465,000 to spend on a short term investment. Ask yourself, “Of all available investments, would I buy my house at $465,000 in the hope of earning a $10K profit in the next few months?”
Not accepting an offer from a qualified buyer is essentially buying your home back for the offered price. Obviously, if your Realtor and you think you can get the buyer up on price, go for it! But if not, before you walk away, ask yourself if you sell your home at the buyer’s offered price today, would you be willing to buy it back at that price the next day in the hope of making a profit? If the answer is yes, reject. If not, accept.
Changing your mindset from seller to buyer is a great way to help you remove emotion and make a smart money decision. Remember, once you decide to sell a home, savor the memories but realize it’s now about making an unemotional money decision.
Most of us mentally set “bottom line prices” when we put our homes on the market. But time on the market should temper those expectations.
The longer a home lingers on the market, the less buyers are likely to pay because they presume it’s overpriced (even if it’s not). This is a strong reason why it’s so important to listen to a trusted Realtor’s advice on initial pricing. Many sellers end up selling for less down the road than they would have in the beginning if they’d priced their home right when it was first introduced to the market.
If you want to sell your home at the highest possible price, list it right and evaluate each offer as though you’re a buyer, not a seller. It’s good advice from Chubby, my dad.