Why do some houses sell for less?

Article by Cripps Realty

Why do you think lower offers sometimes get picked over higher offers? I asked because it happened on my street lately but now we feel they set the bar lower than it should have been.

In the realm of real estate, the price tag on a house isn’t always a fixed number. You might have come across instances where a seemingly desirable property sells for a significantly lower amount than expected. While this might puzzle some, there are various factors at play that can influence why certain houses are sold at lower offers:

1. Market Conditions: The selling price of houses is often influenced by market conditions, such as volatility in demand and supply. In a buyer’s market, sellers may have to accept lower offers to attract potential buyers.
2. Condition of the Property: Property condition significantly influences selling price, with houses in need of repairs or renovations fetching lower offers. Buyers often consider the cost of repairs or upgrades when making offers, leading to lower bids for properties requiring extensive work.
3. Location: Location significantly influences real estate valuation, with houses in less desirable neighborhoods or areas with limited amenities commanding lower prices, while factors like schools, public transportation, and commercial hubs significantly influence property values.
4. Seller’s Motivation: The seller’s urgency can influence the final selling price of a house, with financial constraints, divorce, or job relocation prompting lower offers. Banks and foreclosure auctions also often offer discounted properties for quick sale.
5. Overpricing: Houses may remain on the market due to overpriced initial offers, but sellers may adjust their asking price to align with market realities, attracting new buyers and resulting in a reduced sale.
6. Negotiation Skills: Negotiation skills significantly influence real estate transactions, enabling buyers to secure lower prices by identifying factors like repair issues or market trends.
7. Unique Circumstances: Unique property circumstances, such as legal issues, environmental concerns, or unconventional features, can lead to lower offers from potential buyers, limiting the buyer pool.

We’ve previously had situations where a buyer, for instance, had already purchased a property and said, “Hey, we need April 1st, for example.” When the highest offer was made, the buyer responded, “No, we don’t want November 17th; we don’t want to have to bridge mortgage that whole time; we want April 1st, so it could be because of that.” Perhaps there was a backstory involved, perhaps they sent in a photo of their family with a brief blurb about how much they loved the neighborhood or how their parents lived nearby, or something else, and maybe they met the people and they were nicer, or maybe they met the top offer and they were rude.

Usually, though, it’s due to the closing date because most people, of course, care about money. If it’s not money, it usually has to do with the closing date or deposit. For example, let’s say that someone offers them a million dollars with a $5,000 down payment, and someone else offers them $997,000 with a $200,000 down payment. They accept the lower offer, knowing that it will reduce their earnings, but they also receive a larger deposit. They simply get the impression that the client is sincere at that point, and they have additional resources in case something were to go wrong.

Lower offers in real estate are due to various factors such as market dynamics, property condition, location, and individual circumstances. Ultimately, a successful real estate transaction often hinges on finding a balance between the expectations of both parties involved.