How Come it’s not Selling?

August 2007, Alice Springs, NT Australia

“Look at this nice house on Mercorella.” I said to Marieta as I stared at the newspaper advertisement. “Been sittin here for weeks and not selling. I wonder why?”

“I noticed it too. Why don’t we take a look at it?” Marieta replied.

So, on Saturday, we headed for the open house. We liked it from the moment we set eyes on it.

“How come it’s not selling?” I asked the agent.

“We did have it sold but the deal fell through.” He replied. “They couldn’t come up with the finance.”

My eyes got big. I got excited. This could be a great buying scenario. Deal has already fallen over. Owner may be anxious to sell; may be willing to negotiate to get a quick sale. I’d have to find out. So, more questions.

“Is the owner keen to sell?”

“Yeah. The owner wants it sold quickly. So, if you come in with an offer, you never know, it may be accepted.” Replied the sales rep.

“So, the owner will look at offers?” I continued.

“Definitely. Make an offer and I’ll present it.” The salesman strongly suggested.

Why all the Fuss?

What was the big deal about this house? Good question. So, let me tell you what we were looking at; what was on offer.

It was a four bedroom, double lock up garage home. It presented very nicely from the street; good curb appeal. It sat on 500 square meters of land; a nice corner block in a very good neighborhood within walking distance to the central business district (CBD). The home had two spacious bedrooms on the ground floor; another two upstairs. The main bedroom upstairs came equipped with an ensuite bathroom. The modern and spacious kitchen opened up to the large living room and dining room areas. Then a large sliding door opened up onto the small cement outside patio area. The large two door garage featured remote control door openers. The bottom floor of the home was rendered brick, while the upstairs was shingle clad.

The home presented beautifully and would be easy to live in as well as attracting good rental clients. It seemed the perfect rental. Now, to work a deal. Now, to get the price right.

Getting the Price Right

Getting the price right was relatively easy. You see, the price was already right. That’s what attracted us to the house in the first place. We looked at the $319,000 asking price and thought, “This seems like a low price for the amount of house advertised.” So, the next step was to check it out in person to see if there’s a discrepancy; to see if there’s a reason why the price seems low. Are the pictures in the paper misleading? Is there some obvious reason why this home is priced relatively low compared with other properties on the market? After our viewing we had the answers – “NO” on all counts. The house was simply priced to sell. For some reason the owners wanted a quick sale. What’s the best and most effective way to get a quick sale? That’s right; lower the price.

But, human nature being what it is, you can’t always count on people behaving rationally. I know – I can relate – a lot of times I’m guilty of this very human condition. But, I figure it’s what keeps life exciting. It would be too boring otherwise. What do you reckon?

So, even though the house was priced to sell, it wasn’t selling. The market was a bit flat but others house were priced higher and offered less and they were selling. Go figure! This is where human nature and reverse phycology kicks in … people start second guessing themselves. Asking the wrong questions. Questions like, “What’s wrong with the house? There must be something wrong if it’s priced that low?”

Couldn’t people just as easily ask, “Should we investigate? Could this be the deal we’ve been looking for? Could this be a great addition to our property portfolio?”

Then if research proves the deal doesn’t stack up, then drop it. But, why drop it out of hand without looking?

Let’s Make an Offer

I figured the asking price was fair, but I never like to offer asking price. So, my offer was based on a couple of old standbys. First one is the usual, we don’t need the property. If someone else is in a hurry and wants it more – and is willing to pay more – they can have it. We’re not in a rush. Next, I like to offer something low, that way we have the opportunity to fish for the seller’s lowest price. So, based on these two parameters I called the agent.

“Marieta and I have discussed the home and we’d like to make an offer.” I started.

“Ok, let’s have it.” The agent cheered me on.

“We’re not really looking for anything right now, but this property looks good and if we can get it for the right price it’ll give us options.” I continued with my story. I’m not sure the agent was really interested in anything buy the offer price. But, he’d have to wait. I had more to say.

“We could easily live in this house. Marieta and I both agreed it would suit us. And, we like the idea of having a nice house ready for us to move into when and if we decide to move out of the company house. And, this house would make a great rental as well. It has all the features folks are looking for and it’s in great condition. Maintenance should be minimal and it should attract top rent.”

“But, we don’t need it and our offer reflects that. So, after crunching the numbers, we feel comfortable coming in with an offer of three oh five.” I finally told him what he wanted to hear. Or what he didn’t want to hear. My offer was too low.

“That’s a bit low. I can’t take that offer to the seller. Can you give me a better number?” The agent was doing his job; remember, he works for the seller.

I stalled for time then came back with, “That number works for us. What number works for the seller?”

“I could go back with three oh eight. Can I take that offer to the seller?” The agent knew the final number and was giving me a big hint.

“Ok, three oh eight. But, that’s it. We’ll let someone else have it if the seller doesn’t like that number.” I replied as if I wasn’t emotionally attached. In fact I was; I now wanted the house.

Proud Owners:

The agent called back with the good news, “You’re now the proud owners of the home. The seller accepted your offer. It’s yours for the bargain basement special price of three hundred eight thousand dollars!”

On 20 August 2007, we settled on the home and shortly thereafter we had it happily rented for the tidy sum of $380 per week.

Very Happy Ending

We have no plans to move into this home but it’s been a great investment for us. In three short years the property market has changed dramatically; dramatically upward. This house is now very happily rented for an amazing $550 per week. And we had people lined up to pay this rent. We had choices. And, it would easily sell today for way over the $500,000 mark. The deal made sense when we bought; it makes even more sense today.

I wish all our property investments when as smoothly as this one. But, again, that would be too boring.