Over the years I have seen buyers miss buying the home they want because they don’t understand the key thing about real estate. If you find a home you really, really want then make an offer that will get accepted. Otherwise, you will never have an opportunity to get that home and may not find another one since every home is unique. For example, a few years ago I was selling a house in my neighborhood that was just like all the other houses with 2672SF, 4 bedrooms, 2.5 baths, a pool, and a two-car attached garage. The big difference was the huge cul-de-sac lot and the additional three-car detached garage. The house was in a great Tempe location and no other house had a five-car garage. We priced it at $499,000.
During my open house, this nice young couple came in and fell in love with the home. They said they had a house to sell that was under contract and would close in about 10 days. They were moving in with their parents temporarily until they found a new home. They were working with a realtor and said they would contact her to send an offer. The buyers sent an offer of $440,000. The reasoning was the other homes in the neighborhood of similar size had sold for around $425,000. They could not justify offering $499,000 as they did not think there was that much-added value for the additional 3C garage. This offer was rejected because the sellers received a $475,000 offer at the same time.
The same thing happened on a house I recently listed in Glendale. With the crazy market, we were having a hard time figuring out the right price so we started at a fairly high initial listing price. There were zero homes available except for one that had a 2-year tenant in place. After two weeks we dropped the price to $419,000. We received an offer of $385,000 or $34,000 under asking. The sellers rejected the offer because it was too low. The buyer increased the offer to $400,000. Again the sellers rejected it because it was still too low. A few days later they received a full-priced offer from a different buyer with no seller concessions other than a home warranty. Obviously, that offer was accepted.
In real estate, the buyers and the sellers typically don’t talk directly to each other. The buyer’s and seller’s realtors are the ones discussing the offers. In both these situations the buyer’s realtors told me the home was not worth more than the offer price based on the competitive sales in the neighborhood. I am not sure if this is what the buyers told their realtor or if this is what the realtor told their buyers. In either case, the offers submitted were so low the sellers would not counter. Not only did the buyers not get the home they wanted, but they also never even had the opportunity because they did not make an acceptable offer.
When I am working with a buyer, I believe my job is to get my buyers the home that they want. My opinion of the price is irrelevant. I encourage my buyers to make the best offer they can depending on how much they want the home. If it is a financed purchase and the appraised value does not meet contract then it is a new negotiation with the sellers. The sellers can refuse to reduce the contract price to meet appraisal and the buyer has the choice to cancel or make up the difference by increasing their down payment or see if they can modify their mortgage terms. The sellers can agree to reduce the contract price to meet appraisal or negotiate something in between. However if the buyers do not make an acceptable offer they will never get the opportunity to buy the home they really, really want.