There probably are more myths than this but today I’m going to focus on three of the most prevalent:
1) If a home’s been on the market a long time, the seller must be motivated and will accept an extremely low offer.
Days on Market is an inexact indicator, to say the least. Yes, a high DOM can be indicative of a desperate seller who needed to sell two months ago and will do almost anything they can to be rid of their house. But it also can be indicative of a seller who’s set on a certain price and refuses to be swayed regardless of market conditions.
Assuming the former when it could be the latter results in false expectations and wasted time on everyone’s part.
2) Sellers will give their homes away.
It’s usually not stated in such fashion. Usually it’s something along the lines of what one buyer told me, that her son told her homes are available here in the Phoenix market for 60 percent of the list price. If they’re overpriced by 30 percent, that just may be the case. But otherwise … not so much.
On every listing I’ve taken I’ve received a pseudo-offer (a letter if intent actually) from one of these cash-for-houses places, usually offering 70 cents or so on the dollar. I’ve yet to see a seller so much as sniff at these as they’re not regarded as serious offers.
Undercutting even the undercutters doesn’t seem the soundest of strategies, but what do I know? I only do this for a living.
About the only situation where this is even remotely possible is with a new build, where the incentives offered usually add up to a decent portion of the base price. But even then, you never know whether that discount is really a discount or if there’s a mark-up ahead of the discount already priced in to balance the score.
3) Cash means you can name your price.
Again, not so much. You have far more flexibility with a cash offer and a quick close, that’s to be certain. But it’s dubious thinking to believe you can offer 30% under the market and get the house even with cash, mostly because those offers already have been made in the vast majority of cases.
For those who are serious about buying there are deals to be had. But list prices need to be viewed in the context of current market value. True, a new market value is established at the point where seller and buyer agree to a sale and purchase. But assuming that every seller will hand over their keys for cents on the dollar just because is a mistake.
Think about your home … would you accept 60% of current market value to sell except in the most dire of circumstances?
That’s what I thought.
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Tags: Phoenix Market, General Real Estate, Tips for Buyers by Jonathan Dalton
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