How important is patience when selling in a hot market?

By Lindsay Smith/Real Estate Columnist

There is a saying, “patience is a virtue,” however when it comes to selling real estate, it may be the difference between being a buyer and having a bid accepted on a home, or a seller accepting the best offer. Let’s dig in and explore how patience may affect the sale of a home.

There is a common expression within the realtor community, “you don’t want to leave money on the table.” What this means is by slowing down, exploring all possibilities prior to making a decision may secure the home at a lower price or for a seller, realizing a higher sale price.

When a buyer is buying a home, at times (when multiple bids are happening on a home) waiting and being the last person to enter the biding process can pay off. When a buyer in interested in a property and the seller is looking at offers, let’s say at 6 p.m., submitting an offer close to the presentation time allows the buyer to determine how many other buyers they are competing against. This way the offer can be as strong as the buyer needs to be, to stand out from the competing offers. Likewise, if a seller is holding off accepting offers, and the buyer has some interest in the property, however it is not their first choice, by holding off and waiting to see what the response on offer day may be the best decision in the negotiation process. In the event that there are no offers, or if the property remains on the market, by having patience, the buyer may be in a better position to negotiate after the offer date.

Another successful strategy I have seen utilized in the past has been more an emotional decision, rather than technique. I have been involved in negotiating on behalf of a buyer and coming to a standstill point where the seller is inflexible in a price that the buyer is not willing to pay. With negotiations at a standstill, the buyer lets the process stall and begins to look for another home. By waiting I have had the experience where the seller has “sellers remorse” and approaches the buyer to be more willing to make a deal. Again, by waiting, even if it was not a strategy, this ultimately speeds the process along.

When it comes to sellers, patience may mean coming to understand that it really is not “normal” for all homes to sell in under a week. I have seen many sellers frantic when they realize their home has been on the market for a week or longer and become frustrated that the process is taking so long. A good reminder of a “normal market” is that a balanced market is defined as three to four months of inventory, which, in common speak means it takes four to six months to sell the average home. Currently we have a supply of homes measured in weeks not months, so I totally understand how sellers feel the “need for speed.” This also applies when a “bully” offer is presented to a seller. When this happens, the seller weighs risk versus reward. Meaning is it better to jump on the first offer or wait until the property is exposed to the marketplace before dealing with the offer? Our market has been a hot seller’s market prior to 2016 and I have only had one instance where a bully offer was higher than offers that would come after a property was widely marketed.

Another idea to slow the process to ensure that the best offer is available to the seller, when dealing with multiple bids, is to allow the buyer representatives ample time to speak with their buyers during the presentation to determine if the offer they have submitted is the most they will pay. I have had situations where a seller’s rep does not ask if the buyers will make any adjustments in their bids. This way of negotiating speeds up the process and in some cases does not give an opportunity for a buyer to increase.

When I am negotiating, I tend to run a series of questions past the clients in advance to help them in their decision. What is the property worth to you? What is the range you are hoping to sell in? What is your walkaway price? (for buyers) How critical is the closing date for you? Do you want to offer your best, or start at a point that you can increase from? Or is this a one shot offer? (buyers) If this offer is not accepted, is the risk worth the chances of selling higher or accepting less? (sellers)

I have found, negotiating over the past 36 years, that buyers and sellers make better, well thought out decisions when they have time to form decisions that best suit they and their families. I will admit, I have sold homes signing contracts on the hoods or trunks of cars, in barns, on park benches and once on the windshield of a snowmobile, however this does not mean that the client was rushed in their decision making process. There are times when a quick decision needs to be made, but when the homework has been done in advance, and the decision is part of a well thought out process, the outcome more times than not is one the client is happy with.

If you have any questions on the above information, or if you can see a real estate emergency on the horizon, I can be reached at lindsay@buyselllove.ca.