One of the toughest challenges in real estate is getting realistic offers accepted when an owner has unrealistic expectations.
Here are a few common scenarios...
- You are selling a poorly presented, 3-bedroom suburban home with lots of outstanding repairs. Your vendor has a bottom line of $730k. Market feedback puts the property in the mid $600's at best. You secure a solid offer at $680k after 4 weeks on the market but the owner won't even consider it. After pleading with them to at least counter-sign, they agree to go back at $760k. You struggle for weeks to get closer but after growing more and more frustrated, the buyers walk away and buy another home nearby.
- You've been trying to sell a large 5-bedroom home with weather tightness issues for 3 months. The owner wants $900k which you know is unrealistic. Market feedback puts the property at $750 - 800k tops, which you have been communicating in your vendor reports throughout the process. You finally secure an offer (your first since going on the market) at $750k and the owner won't even counter-sign it. In fact, they blow their top at you for presenting such an insulting offer.
- Your owner is hoping to get $600k for their total doer-upper with consenting issues. You run a 3-week deadline process and secure 7 offers. All of which are between $450 - 550k, painting a clear picture of market value. Your owner wants to turn down all offers and go back on the market.
Do these situations sound familiar?
Firstly, don't beat yourself up if they do. We've all been there. Real estate is a tough gig! It's standard practice for owners to want more for their houses than what the market thinks is realistic.
Understanding your role
As a real estate professional, our job is to find out what a property is worth in the current market. That means, we need to attract buyers to view the home and encourage them to make offers where they see value, while trying everything we can to negotiate the best possible price for the owner(s). If we can generate competition between buyers, it usually makes our job a lot easier.
Securing offers is seriously challenging, especially on properties with issues. So when you do get that far, give yourself a massive pat on the back for doing your job.
Just getting offers doesn't pay the bills though. We need to turn these offers into sales to build a thriving real estate business.
How to get more offers over the line
The first key thing to realise is that when the offer comes in, and the owners flip out, or won't even negotiate, it's often too late to change their minds. Their defensive wall is up. They are determined to stand their ground and not get bullied into doing something they don't want to do. Everyone wants to show how good they are at negotiating when it comes to buying and selling a house, even if the price they choose to hold out for makes no logical sense.
That being said, there is always a chance you can help owners see the wood for the trees. Here are some phrases you can use in the offer presentation meeting when you reach an impasse:
- "Mr & Mrs Seller, we've been on the market X weeks, run X open homes, had X buyers through and this is the first offer we've had. Where do you see a better buyer coming from? How long do you plan to stay on the market?"
- "If this was a cash-unconditional offer, what would you be prepared to accept? Let's counter-sign at that figure and see if the buyers can come up. I'm happy to go back and try for you."
- "In that case Mr & Mrs Seller, maybe you'd be better off renting your property out. Would you like me to arrange for our property manager to visit you?"
- "What are your holding costs each week of staying on the market? (Insurance, mortgage, staging, rates). How much interest could you earn by putting the money in the bank once you've sold? Add these two figures up to work out how much it's costing you to hold out another month or two for a better offer that may never come."
Please don't use phrases like: "This is the best offer you're ever going to get." Because you simply don't know if that's true. A better offer could come in tomorrow. It may be unlikely, but it's never impossible.
Examine your process
In all reality, the time to work on getting more offers accepted is long before those offers come in.
The work starts at the appraisal and carries on throughout the marketing process. You will get more offers accepted if you:
- Discuss price correctly at the appraisal and listing meetings.
- Meet with your owners in person every week during the first 3 weeks on the market, and every 2 weeks after that, at an absolute minimum.
- Avoid sugarcoating buyer interest at all costs.
- Prepare your owners for every possible outcome.
Let's examine each of those situations and give you phrases to use that will lead to more offers being accepted when they eventually come in.
Educating, not conditioning
Please note, we are not talking about 'vendor conditioning' here. which is an industry term I absolutely can't stand.
As an owner, it's human nature to expect everyone to love your home, to expect every bit of interest to turn into an offer, and for every buyer to see value the way you do. We all look for confirmation bias to support our own position. So if we've decided that our home is worth $900k (when the market actually thinks $800k), then every buyer visit is an expression of support for our view, and every thousand hits we get online further cement our thinking. The professional photographs that look incredible help us believe that our dream price is not only possible, it's damn near guaranteed.
This is the challenge we are up against as salespeople. So a big part of our role is not only to bring offers to the table but to help our owners understand what the market really thinks of their home, so they can make logical real estate decisions based on facts. So they can recognise a decent offer when it comes their way.
Discussing price correctly at appraisal and listing meetings
Always base your price opinions on market facts. What sales can you point to that support your view? At the same time, you don't want to limit hopes at that point, because you can't rule out a high price coming in from a buyer who falls in love with the home.
"Mr & Mrs Seller, here are the recent sales of similar-sized homes in your area. What are you hoping to get for your home? (Pause). Ok great. If that price is out there, I'm confident we have the marketing plan to find it. When I appraise your home I have to base my value range on facts, which are the recent sales I've shown you. But please understand that I don't want to have any preconceived limitations on what we might achieve. My job is to go out and get you the absolute best price the market is prepared to pay at this time, whatever that might be."
Vendor meeting price discussions
One of the biggest mistakes agents can make is skipping vendor review meetings. Just sending a feedback report by email is never enough. You have to regularly meet with your owners face to face (or on a Zoom call if overseas) to understand where they are at, and to give them a realistic overview of the current market. Here are some phrases to use:
"Mr & Mrs Seller, we've had 12 groups through so far, which is ok, but a little less than I'd hoped for. I'm going to adjust the advert headline and change the main photo to see if we can spark more interest. I'm also going to send another notification out to our database to remind everybody what a wonderful home this is. Of the 12 groups that have visited so far, 3 of them are showing some interest, but no one is talking about offering as yet, and none of them have booked a second viewing at this stage. Let's see how the next open home goes and meet again next week to review progress...
... By the way, you are doing a wonderful job on the presentation, and thank you for being so accommodating with viewing times. You are doing everything right to get the best possible price for your home."
Can you see how this sort of wording helps the owners avoid falling into the confirmation bias trap? It would be so easy for them to see the 12 buyer viewings and think that guarantees at least 2-3 offers, especially if some of those 12 buyers are interested. Remember, owners are new to the whole selling thing. They don't understand how hard it is to secure offers!
If you are running vendor reviews after 2 or more months on the market, use the scripts in this guide to move your listing into a sellable zone...
Avoid sugar-coating buyer interest
Your key buyer has just come back for a second viewing with their entire family. You call the owners to update them after the viewing...
"Hey Mr Seller, yes the buyers came through and they bought their parents this time. They are definitely interested but they still have to work through things with the bank, lawyer, builder etc. So this is positive but the real sign of interest is when we receive a signed offer and at this stage that is certainly not guaranteed. Rest assured, I'll be doing everything I can to make it easy for them to offer, and to get the best possible price when they do. Ideally, we need a few more viewings like this because it's very common for buyers to show interest and then pull out at the last minute, especially in this market."
It's ok to be positive about visits with your owners, no one wants to be a Debbie-Downer, but please ensure you wrap that positivity in some realism too, so your owners don't get carried away thinking their high-price dreams are about to come true.
Prepare your owners for every outcome
Deadline day is tomorrow and you hope to have 3 offers coming in, but we know nothing is guaranteed until they arrive on your desk.
"Mr & Mrs Seller, with the deadline approaching, I want to run you through what could happen tomorrow. There is a possibility we get no offers, in which case I'll still come meet with you and we'll talk about our plan B. Rest assured we have lots of strategies we can employ to get your home moving if this is the case. There is also a possibility we get one offer or multiple offers which you don't like. In that case, I'll encourage you to counter-sign the best available offer so we can try to get them to a point that would work for you. Lastly, we may get one offer or multiple offers which you find acceptable. If that happens, you can still negotiate if you like, and you can take some time to think about it before making a decision if needed. At this stage, we have 3 groups showing possible signs of offering, but I haven't received any written offers as yet, so anything could happen. Please be ready for any of the possible outcomes I mentioned."
It's a lot easier to get owners to counter-sign an unacceptable offer if you have told them that's what's going to happen well before they see the offer!
So when they do flip out at the 'offensive' price, you can calmly respond with:
"Just like I mentioned. This can happen. Buyers rarely come in at their top price. Like everyone, they are scared of making a mistake. Let's counter-sign the offer as we talked about and see if they can come up. If this was a cash, unconditional offer with a good settlement date, what would you be prepared to accept?"
We've covered a lot in this guide. But if I had to sum it all up simply, I would hope you walk away with these key messages:
- Don't overpromise
- Manage expectations
- Meet your owners face-to-face as often as possible
- Prepare them for every possible eventuality