Everyone wants to have their cake and eat it too.
I’m always a little amazed and amused when I get the inevitable question from the Buyer’s Agent prior to the offer date: “What are the Sellers’ expectations? (They’re “great.”)
With more than 20 years of selling Real Estate, I’ve yet to answer that query the way they’d probably prefer: “They just want a nice family who will love the house as much as they have. Price isn’t really their driving force or even their objective . . . ” (Yeah, right.)
Which isn’t to say that Sellers don’t care about who buys their house (They do.) OR that they want them to love it as much as they have. (They do.) OR that it’s important to them that the Buyers be good and faithful stewards for the property. (It is.) OR that they hope the new Homeowners prove to be good neighbors. (Bonus!) But when push comes to shove, most Sellers quickly abandon their ideals in favor of the highest offer.
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The personal stories of one Realtor’s battles and triumphs in the highly-competitive Bay Area Real Estate Market, seeking to illuminate and humanize the very real ups-and-downs of homeownership.
In my experience, Sellers (and their Agents) tend to prioritize the highest and best offer ahead of nearly every other consideration, and they should. At its core, selling a home is a business decision first and foremost.
But selling a house isn’t just about the highest number, it’s about the best bet. Yes, we’re looking at numbers, but we’re also heavily weighing the terms outlined in the purchase agreement. If the highest offer also arrives with a long list of contingencies attached to it, the Seller is rolling the dice.
Consequently, CASH remains KING because cash presents far fewer risks. Even when an all-cash offer falls well short of a higher but heavily financed bid, Sarah and I will make a quick call to ascertain if the cash Buyers are willing to come up in price. As is our duty (remember, we have a fiduciary responsibility), we are curating the offer that creates no drama in escrow; one that will easily sail through with nary a rough patch. (Winner, winner, chicken dinner!)
And while the all-cash offer isn’t necessarily a slam dunk (go Warriors), it completely removes the finance and appraisal piece of the equation, which is the most vulnerable part of any transaction. Make no mistake, an appraisal will be conducted on a financed purchase, irrespective of whether the Buyers have elected to waive their loan and appraisal contingencies, or not. (The lender requires it.) Just for the record, appraisals DO fall short from time to time, especially when Buyers are offering hundreds of thousands of dollars above the list price to win in competition, and nobody, nobody, NOBODY wants to be the guy who paid more than the appraised value. (Would you?)
“Well then, could you share the magic number with me?” Agents press. (Sure, it’s whatever the market will bear . . . plus MORE!)
To be clear, “whatever the market will bear” can be as tough a concept for Sellers to absorb as it is for Buyers. Unlike some other countries that employ an open market with respect to real estate, a home purchase in the U.S. is essentially a blind auction. Moreover, in the Bay Area, the “list price” can be incredibly nuanced. For lack of a better term, “strategic pricing” sets the bait. Agents neither expect nor will the Seller likely accept the list price as published. (Whether you agree or disagree with this practice is an argument for another day.)
As is too often the case, Sellers tend to move their bar as the property gets closer to its market date. Having invested heavily in the improvements, and being naturally biased about their homes, Sellers conveniently forget that the house still has knob & tube wiring, a brick foundation, a 25-year-old roof, and original single-pane windows, OR that its location may be less than ideal, OR that its got a HUGE structural finding, OR, OR, OR . . . , which is why we are often asking our Sellers to reset their expectations to better align with market realities. (As you can imagine, this conversation is rarely met with joy.)
Whether representing Buyers or Sellers, good Realtors® establish market context, assess the current marketplace, and when necessary (as in almost always), push back on GREAT EXPECTATIONS. (We wouldn’t be doing our jobs if we didn’t play devil’s advocate.) If a willing and able Buyer is prepared to pay more, we’re all for it, but Sellers should avoid pointing to the one outlier sale on their street as proof of their home’s elevated value. (I’ve yet to meet the Seller who calls my attention to the lowest sale on the block.)
At the risk of shooting the messenger, we need to acknowledge that the market is in transition, interest rates have more than doubled, insurance has quadrupled, the stock market is in flux, signs of recession are on the horizon, and Washington D.C. has created an uncertain future that’s affecting not only our collective psyches, but our local marketplace as well (not to mention the greater world at large).
And with that sobering news as our backdrop, let’s be both realistic and grateful that the property has found a willing audience at all (suddenly, many listings are twisting in the wind). If we meet a Seller’s “great expectations,” that’s a home run (go Giants), but if we come close, that’s also a win, and we hope you agree.
Finally, tempering expectations is a conversation we’re having with the Sellers to set a more receptive stage. On the buy-side, we’re leveraging every bit of interest in the property and working diligently to bring the Seller MORE, as is our obligation. If that includes Buyers who will love, care, and honor the house as much as you have, so much the better. That’s the icing on the cake.
(Speaking of cake, don’t forget your mothers come Sunday!)
How can we help you?
Julie Gardner & Sarah Abel | Compass Realty
Not just Realtors, but consultants in all things house and home, we’re here to educate, explore, examine and refer . . . In short, you may count on us to take care of your home as if it were our own and anyone who knows us, knows we take pretty darn good care of our homes.
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