|July 21, 2008
Ocracoke Island Real Estate: Your first offer is usually your best
By B.J. OELSCHLEGEL
A current topic of conversation, for not only real estate agents but
the general public, is the state of home sales. As the rest of the
country faces a slump in sales altogether, our experience on the island
is that as prices drop, the sales pick up. We seem to have a pool of
buyers who maintain a passion for the island.
We’ve been lucky to have an emotional component in the draw to
the Ocracoke market. Just today, I heard a “soon-to-be
resident” of the island describe the rush of tears as she came up
over the dune and witnessed the sun rise over the ocean. The natural
setting, the people, and the sense of community pull at the
heartstrings of our buyers. We are a unique market in some ways. In the
workings of a real estate negotiation, we face common issues with the
rest of the country.
My business partner, Daphne Bennink, caught an interview, with a real
estate agent from New York, on a recent morning news program. The
essence of the conversation centered on advice for sellers in a down
turning market. Some of the points that she covered were
Over the years, my fellow agents and I have had more than one
discussion, with sellers about the difference between comparable sales
and what that seller believes is the value of their property. It is
understandable that sellers will see their home as the Taj Mahal.
Our familiarity with recent sales often indicates that the market will
not support such an asking price. Besides having an emotional
attachment to their home, sellers will often pick up a listing flyer
and match their home to other listings on the island.
“Well if so and so is asking X, then I should ask Y because my house is nicer than theirs,” the seller will say.
The critical piece that sellers forget is that listing prices are not
selling prices. A list price is merely an indication of what a seller
hopes to see on a contract. Listing prices may not reflect market
value. Market value is the price that a ready, willing, and able buyer
is willing to pay and a seller is willing to accept.
Point No. 1. Sellers need to set their list prices based on the market,
which implies having the agent provide comparable sales. The harder
fact to accept is that market value might not be where the seller would
like it to be.
No one needs to be told that it is a buyer’s market. The
inventory of properties listed for sale is staggering. If sellers want
to sell, rather than advertise their home, they need to lower their
listing prices to be competitive. Ultimately, the seller may also need
to lower expectations when in the throws of negotiating a contract or
responding to the results of a home inspection. In this secondary
housing market, buyers are not in the desperate position. If sellers
want to move on in their lives, they are the ones motivated to
compromise. These conditions make it ripe for a buyer to capitalize on
a “good deal.”
Point No.2. Don’t take offense at a buyer’s low-ball offer.
This is how the game is played. It might seem like a personal attack,
but if sellers can disconnect from the emotional attachment to the
property and any related hopes for a windfall, they will see that what
is left is merely an offer to buy.
Point No.3. The worst mistake a seller can make is to not counter a low
offer. It does not cost anything to make a counter offer. The key for
the seller to remember is to keep the buyer engaged in a negotiation. I
describe that as “a bird in the hand” (as opposed to two in
the bush). An owner’s counter should be low enough to entice the
buyer in, but high enough for the seller to be content with the
outcome. Keeping a buyer at the negotiation table provides the
opportunity for the selling process to continue to move forward.
The final point made in this television interview is one that has supplied me with a lot of food for thought.
Point No. 4. A seller’s first offer is, nine times out of 10, the
best chance to sell the property. I’ve spent a lot of time
pondering the why of this statement, and I have come up with two ideas.
When a home is listed for sale, the agent gathers all pertinent
information on the property, such as the tax card, the survey (if
available), the septic permit, a floor plan with room measurements, a
rental history with expenses, a copy of the title insurance policy, and
I’m sure the list could go on and on. The house is shown, and the
process of the buyers reacting to the layout, décor, or size is
hopefully repeated over and over. These superficial responses to the
home are communicated to the seller. The seller might be prompted to
paint a room or make an obvious repair.
Then the first offer is received and negotiated. The buyers have made a
choice, and they begin to see themselves in the home. At that point,
the buyers are hooked and the sellers imagine their proceeds. As the
selling and listing agents move towards closing, they schedule the
various inspections and required services, along with notifying the
chosen closing attorneys. The biggest test for any contract is the
results of a home, septic, or termite inspection. There are facts about
a property that surface only as a result of these in-depth
investigations of a home.
Once those conditions are uncovered, they become material facts that an
agent is obligated by law to transmit to any subsequent buyer. They are
issues that do not go away. If they are not dealt with in the current
transaction, they will surface again in the next. Because the buyer is
emotionally in the ring for this house, the seller would be advised to
accept or negotiate the repair requests of the buyer. The next buyer
might not be so “hooked.” The next buyer might see the
repairs as more of a burden than simply as a hurdle.
My other idea about this fourth point is something that I have been
watching since the start of my real estate career. I remember a home
that went on the market, back in the mid-‘80s. I was impressed
with the listing price, believing that the sellers were subject to
wishful thinking. There might have been some offers, but with it not
being one of my listings, I couldn’t really say. After having not
sold for two to three years, the property became “dogged.”
The price might have been dropped slightly, but the buying public was
paying attention to the fact that this one was not selling. When it
finally went to closing, it was at a price that was way below what it
should have sold for, had it been priced correctly in the beginning.
I’d give my eye teeth to know if there had been offers in the
first year that were totally rejected. I think that this might have
been a perfect example of the agent’s premise.
I’m sorry to say, for the sellers in this market, that the upper
hand in real estate transactions today is with the buyers. Sellers have
two choices. They can wait for the market to turn around before selling
or they can accept this state of the market and move on in their lives.
Each side in any deal likes to believe that they have won something.
Maybe the prize for the seller is the chance to take some money and run.
Oelschlegel has lived on Ocracoke Island for 30 years and has worked in
the real estate business for 26 years. She is a broker with
Ocracoke’s Lightship Realty. You can reach her e-mail at