Over many years, these five beliefs and sayings have embedded their way into the culture of buying and selling houses. But are they true? And how do they impact your chances of finding a buyer or securing a home you love?
Let's dig in...
Myth 1. Your first offer is your best offer
This old real estate adage isn't always true. Buyers often try to act quickly and snap a property up before other buyers can get organised. Why would they do this? To avoid having to pay more, of course.
How to protect yourself? Hire an agent that seeks to create a competitive situation between buyers if at all possible. And if you are happy to market your property publicly, try to ensure all buyers have had a chance to know your property is for sale before you accept an offer (i.e. make sure it goes up on the internet for a few days first).
Myth 2. There are plenty more fish in the sea
"If we miss out on this house, another similar one will pop up soon, right?"
Not always, houses are often unique when you combine their location, sun aspect, access, condition and proximity to amenities. And that's all before you consider layout, design and 'feel'. If you find a house you love, and it's the best one you've seen after months of looking, then it pays to do what you have to do to own it. Don't be afraid to make your offer as attractive as possible. You might never find another home quite like it.
Myth 3. The salesperson is lying about the other offer
Real estate is a trust-based business with layers of privacy. When your salesperson tells you another buyer is interested in the same house as you, it's not just a ploy to get you to pay more. They are doing their job. We want you to get the house. What you decide to offer (and when) is totally your decision, but we do need to keep you informed throughout the process. That means advising you when other interested parties get involved.
We can't tell you what the other buyer is offering or whether it's higher or lower than yours. We won't share information regarding your offer, either. Take heart in the knowledge that someone else likes the same home as you. It shows you have good taste!
Myth 4. We need to deduct the cost of renovations from the purchase price
A common approach from buyers is to look at the asking price for an average home and subtract the cost of future renovations before settling on an offer price. For example, the asking price might be $800k, but you feel the home needs a new kitchen and bathroom so you subtract the full cost of those changes and offer the owner a reduced amount.
But keep in mind, if the owner spent the money and made those changes now, the home would be worth more and would likely be on the market for a much higher asking price.
Myth 5. It's only a fair price if we meet in the middle
Another trap that buyers fall into is thinking they are overpaying if they don't meet in the middle during any price negotiation.
The 'mythical middle' is created when a buyer makes an initial offer on a home and the owner counter-signs with a higher price. Split the difference between the two numbers and you have your middle ground. From then on, deviating from that point feels like a loss to one side. At this point, it's essential to step back and realise that the middle of any two price positions is simply a function of whatever price each party chose to start with. It's not tied to market value and shouldn't determine what either party is prepared to pay or accept.
Remember that houses are worth different amounts to different people. Do your research and decide what this home is worth to you, but don't shoot yourself in the foot and miss out on a house by not being prepared to budge once the 'middle' is established.
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