I wrote the post below back in February 2011 when frankly I could see the writing on the wall. I could see the emergence of over-inflated asking prices and Vendors who’s price expectations were way and beyond what they should have been. This was partly the fault of Estate Agents, with available listings at the lowest levels for decades the easiest and quickest way to be successful in a pitch to prospective Vendors was to price high. But Vendors are not blameless, inherent greed allowed them to ignore common sense and allow their properties to sit on the market getting no offers, dismiss low offers and ignore suggestions of price reductions. This year both Vendor’s and Estate Agent’s have come un-stuck as a result. Transaction levels are through the floor. Estate Agent’s have not been able to sell their over-priced stock (and each one of these costs them money) and Vendors have often ended up taking a much lower offer 6 months down the line as their property sat around becoming stale and thus unattractive to the market. Vendor’s and Estate Agents, today is the 23rd October 2011- here is your 2 week warning;
If you don’t do something very fast, a price reduction or taking that offer you think is too low, you will be whistling until February at the earliest and I guarantee now that you will be getting a lower price than any offer on the table today….
Working on the premise that you are a Vendor who really needs to sell, as opposed to a ‘let’s see what can I get’ tyre-kicker, here is my blunt advice:
You have put your property on the market and one of two things has happened.
An offer straightaway.
Why is nothing happening?
As there is a lack of good quality stock at the moment, chances are your property is over-priced or there is something wrong with it. Either way, it is over-priced.
An offer straightaway? Great, but I bet if it’s not the asking price you don’t take it. And if it is, I bet you’re screaming that the Estate Agent under-valued it.
Firstly for the lucky Vendors with a quick offer. You may think this is the beginning of a huge influx of ever increasing offers and therefore think you will sit back and await more pennies from heaven. Well don’t. From long experience the very first offers you get will almost always be the highest and the best. Buyers, when they are first to view on a good property will very often make excellent offers to stave off other bidders. Fresh to the market properties are sexy. If that property has been hanging around they don’t feel the need to and worry why no one else has bought it. The longer it is on the market, the worse buyers concerns about it being a turkey, will get and so will the offers. Don’t mess around with that offer, squeeze as much as you can quickly but remember it will probably be the best you get.
So your house has been sitting around for 6 weeks now, dribs and drabs of buyers no offers until one day up pops what you call a ‘derisory’ offer. Ask yourself how derisory it really is. Is it only derisory in relation to the over-inflated asking price? If it really is bad then rent the place out for three years. If you can’t do that then you are going to have to consider it, because the fact is, unless your house is in prime London or worthy of RIBA house of the year, your chances of getting more will only get worse as the weeks go by.
I am being so blunt on the basis that the market is surprisingly buoyant at the moment for Vendors but only due to lack of supply and low interest rates. It won’t last. This lack of supply is very likely to change as the year progresses due to un-employment, rising interest rates and general economic woes. When more properties come onto the market and the demand doesn’t rise, the chances of you getting the price you are offered today will decrease faster than a spider down a plughole.
If my house was going on the market tomorrow and I needed to sell this year, I would be pricing it very realistically, perhaps even under-pricing to create interest. (buyers love what they perceive as an under-priced property). If I had no offers after 3 weeks full marketing with a good Agent I would be dropping the price and I would be looking lovingly at any offer from a buyer with cash or a low LTV mortgage.
To heck with price indices and ‘what it’s worth’. A property’s ‘value’ is only ever what someone is willing to pay for it. And shortly, there will be fewer people who want to pay anything and more for them to choose from. So don’t puff out your chest and allow your ego to run negotiations.
Grasp the nettle and take that decent or even half decent offer… indecently fast.