We’re going back and forth in the offer, counter-offer process of a home sale. Any idea about how to use poker skills in the process? Buyer thinks we’re bluffing–coming in too high (and we are)–so they make a lower offer. We think they’re just slow-playing, so we hold. Yikes. Who will get the full house?! Advice?
Not so much poker skills as sales skills here … price, very rarely, is the issue unless you are way over market.
The trick is to find out why the prospective purchaser isn’t happy with the house as is at the listed price. Location is the normally the biggest issue. Are you too far away from/too close to schools, shops, pubs, transport etc. Buyers will normally demand a discount on the listed price to overcome their objection to the location and this is something that is hard to overcome.
On the other hand, you almost certainly have the number of bedrooms, toilets, bathrooms etc. that the prospective buyer requires. It may be that those specific requirements can’t be met by properties currently available in the “perfect” location.
Does the prospective purchaser need to move in as soon as possible? Offering a 30 day settle and vacate agreement instead of 90 days may well be worth many thousands to the prospective purchaser.
What about decor? The prospective purchaser may not like your current wall paint or choice of curtains etc and are overestimating the cost of redecorating. If you can get an agreement subject to the seller (you, in this case) completing interior decoration, the prospective purchaser may be willing to come closer to the listed price.
Even silly things such as removing (or planting!) a tree or bush will almost certainly have a value to the prospective purchaser.
The prospective purchaser may be under the assumption that you have some pressure to sell … after all, you need somewhere to live and, if this is not your “spare” house, you will buying in the same market that you’re selling in. You have a reason for selling and the prospective purchaser will assume whatever reasons make sense to them that justify low balling you.
As with poker, this is a game of incomplete information and whoever has the most information is most likely to “win”. Just you remember that you can’t bluff someone who truly doesn’t care and will just walk away.
How much interest from other people do you have? The current person may be offering lower than you want but there’s no guarantee that the next person won’t come in even lower!
What about competing properties? If the buyers have choices, they have no need to negotiate too much with you - given sufficient time, they will find someone who will accept what they offer.
Basically, what pressure do you have to sell and what motivation does the prospective purchaser have to buy? Once you marry those two, you have a reasonable market price and the deal can be sealed.
Regards,
TA
Use the bluff Jan. I did the last 3 houses I flipped in this crazy market. Tell them you’re entertaining 3 offers that are over asking price and tell have 48 hours to pull the trigger and submit there best and final offer, if they don’t move on.
Best of luck.
In my neighborhood houses sell instantly and for more than asking price. It’s insane.
I so appreciated the comments here! Today’s update: We are in no hurry to sell, so we haven’t chickened out and accepted a low-ball offer, even though it was the only offer. The underbidder has now vanished because we wouldn’t budge on our price. Today we have a new bidder that has matched our original price. Waiting–having the courage to wait–has worked out for us.
I do think the poker skills–or at least my personal reflections on my strengths and weaknesses in the game–have been valuable in this process. I have been practicing, in poker games, hanging in with what I know to be a good hand instead of being intimidated into folding. So, you see the parallel? Thank you, Poker! Thank you, poker friends!