Dear Monty: We were selling our home and listed it with a real estate agent we know. We just finished the final touches to show the house, so it goes on the market in a few days. The agent has a customer who looked at it a few days ago. We listed it for $424,900. This customer offered $415k. We said we wanted to put it on the market before we could answer. They returned with a $430k offer and a preapproval letter and will close in 30 days. Is there a relationship with the agent? Has she mispriced the house? We are still determining how to handle it. What should we do?
Monty’s Answer: You need more important information about your question, which you may or may not know. The way to respond to your question is to provide some direction on critical information to gather that will give you the confidence to make the best decisions. At the same time, I'll provide some options to consider once you have that information.
Information You Need
- Your hyperlocal market behavior. Agents often overlook this data as it seems peripheral, but it is a critical factor. Hyperlocal means within a few blocks of your home rather than an expansive ZIP code that could contain all three hyperlocal market types: buyer’s, seller’s and balanced markets. If there are four comparable homes for sale and each one has been for sale for 60 to 90 days, that is a buyer’s market. If there is one comparable for sale 20 days and 30 days ago, and three are now sold or pending, then it’s a seller’s market.
- Your home’s range of value. Judging value is relatively easy as they are all in your neighborhood. Make a judgment on the three sold comparable homes that come closest to your home. All three will have sold for different prices. The highest sale price becomes the top end of your range, and the lowest is the bottom end.
- Your financial risk tolerance. You are the one who can make this decision. Due diligence educates you and produces knowledge that allows you to decide confidently. To hand this off to someone not in your shoes is riskier than you making the decision. You are the only one here that knows your financial circumstances. Keep someone from deciding with no skin in the game and potential conflicts.
Options To Consider
There are three options to consider based on the information you shared. There may be other options that develop in the negotiation. You can accept the offer on the table, counteroffer (which is a rejection) or wait to gather market exposure.The Pros And Cons Of Each Option
- Accept the offer. The pros are that you receive a higher than list price, and a significant decision is behind you. The cons are the risk of obtaining an even higher price.
- Counteroffer. The pros are an even higher price if the buyer accepts the counter. The cons are that your counter turns them off, and you cannot achieve the offer you countered when you test the market.
- Test the market. The pros are higher than the initial buyer was willing to pay. The cons are that you cannot achieve the offer you countered, and you lose some time.
