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The higher the offer, the better — for both you and your client. Unfortunately, a combination of optimism on the part of the seller and shrewd negotiating tactics on the part of the buyer (and their buyer’s agent) make it unlikely that you’ll get your client’s asking price.
Of course, there are exceptions. In a super competitive market, with limited inventory, you might get offers well above your asking price. But you can’t count on this to get the best possible deal for your seller — so what can you do instead?
Here are a few tips to help you get through the offer process and land as close to your sellers’ original asking price as possible.
Brace yourself (and your sellers) for the initial offer
It’s common for the initial offer to fall somewhere between 5 percent and 25 percent less than the original asking price, as buyers don’t expect to pay full asking price for a home.
This percentage varies wildly based on a number of external factors, which we’ll delve into over the next few sections, but you can be almost certain the first few offers you get won’t meet or exceed full asking price.
Shoot for minimal days on market
There’s a strong correlation between the number of days a home has been on the market and the percentage of the original asking price received; in other words, the longer a home is available on the market, the lower the offers are going to get.
There isn’t much you can do about this accumulating effect because you can’t manipulate the “days on market” figure.
However, you can use this information to work on finalizing an offer as soon as possible — preferably within the first 60 days of its listing. And you can make this fact clear to your sellers when discussing a pricing strategy.
Look for offers in your 10% range
You can’t fully depend on accepting an early offer to get the best price; however, depending on buyer interest, your early offers may range from very close to your original asking price to much lower.
When you start getting offers within 10 percent of your original asking price, you’ll know you’re close to a great deal. However, lower offers than that might require you to wait for something better to come along.
Negotiate
If you have an offer that seems within striking distance, don’t hesitate to enter negotiations; there are dozens of small changes and strategies you can use to get an offer that maximizes your percentage of original asking price while still making the buyer happy enough to move forward.
For example, you could:
- Make extra repairs or improvements: If the buyer’s home inspection finds little things wrong with the home, you could offer to cover them out of pocket; for example, repairing a leaky faucet might cost your seller a few hundred dollars now, but might be a big enough incentive to get an offer a few thousand dollars higher.
- Make concessions on other terms: For example, if the buyer wants to move the closing date or wants to renegotiate some of the closing costs, it may be worth it — if it means getting closer to that original asking price. Work within your sellers’ needs here.
- Know how to push: In a balanced market, you might push back with a counteroffer that splits the difference between asking price and the buyer’s first offer. But in a seller’s market, you may be able to push for even more. Use data from other recent home sales in the area to feed your decision on this one.
Utilize the price drop
If you aren’t getting any offers or if the offers you are getting are coming in far lower than the original asking price, you may need to have a conversation about a price drop.
Dropping the asking price might be enough to generate more momentum. However, it might also be a sign to potential buyers that there isn’t much current interest in the house or that the seller is motivated to sell quickly — so make sure to discuss the pros and cons before proceeding.
The bottom line
So how close can you get to an original asking price? Although some markets might be so competitive that they earn you more than market price and others are so flat that you don’t have much negotiating room, it depends on how much work and time you’re willing to put in.
Improving your understanding of the neighborhood and local market and making the listing more appealing are your greatest tools for increasing that final percentage.
Larry Alton is the CEO of Alton Enterprises in Olympia, Washington. Follow him on Twitter, or connect with him on LinkedIn.
