Seller Strategies for Hot, Cold, and Neutral Markets
For sellers in a hot market:
- Pricing: Price a little below market. When others are listing at or above market rate, pricing below market may incite bidding wars, fetching far more than pricing it at market rate.
- Countering a lower-than-full-price offer: A lower-than-full-price offer may go unanswered entirely, because it’s likely that offers above list price are forthcoming. By not countering, the seller doesn’t have to wait for a response from a not-that-interested buyer. The seller can ask the party to resubmit a higher offer, however.
- Multiple offers: Have all buyers submit their “highest and best” or accept the best offer and try to obtain a back-up offer from the second-best.
In a cold market:
- Pricing: Price below market. This will help generate interest from buyers but don’t expect full-price offers—buyers may go even lower.
- Countering a lower-than-full-price offer: This depends on how low the offer is. One approach is to select a midway point between the gap and add a small amount so that it would seem unfriendly to counter again. This works if that point is acceptable to the seller, and the buyer’s truly interested. If the offer is truly abysmal, the buyer’s likely fishing and not that interested. Counter close to list.
- Multiple offers: This is rare in a cold market unless the property is priced significantly below market, to the point investors are interested
In a neutral market:
- Pricing: Price below market. This invites interest in the listing and may prompt multiple offers, up to the listing price and beyond.
- Countering a lower-than-full-price offer: If the offered price is close but acceptable, sellers may decide to accept. Check other terms first, though. Sometimes a lower offer is a better deal if another buyer has made a higher offer but is asking for seller credits or doesn’t have solid financing. Here’s another option: If the seller feels strongly about the price, counter at or slightly below list price.
- Multiple offers: Unlikely. If it does happen, go with the best offer and try to obtain a back-up from the second-best offer.