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How low should you go when accepting an offer on your home?

A correctly priced home will match the prices of similar homes in the area. Picture: Yena Kwon/Unsplash

A correctly priced home will match the prices of similar homes in the area. Picture: Yena Kwon/Unsplash

Published Jun 15, 2022

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Choosing to sell your home is a big step that almost always comes after some tough decisions, but it is only the start of many choices you will need to make throughout the process.

Once you have chosen to put your home on the market there are a number of things to consider when working with an estate agent – should you be selling with their expertise.

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Which agency do you choose? And do you only opt for one?

Read our latest Property360 digital magazine below

The experts offer some helpful advice:

Getting that first valuation

Roger Hoaten, managing director of Seeff Berea, suggests you start by seeing which agencies are specialising in your area and how much of a footprint they have.

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“Choose an established brand with a track record in the area.”

He adds that it is “always a good idea” to get a few agents to come and view your property and give you a professional opinion on the value.

Choose agents from well-known companies that are active in your area, agrees Berry Everitt, chief executive of Chas Everitt International.

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“Real estate companies with strong brands are generally also the ones with the most resources invested in supporting their agents with excellent training and business systems, and providing their customers with superior marketing and referral systems to ensure the property receives maximum exposure to potential buyers.”

Choosing between the agents

Everitt cautions against choosing an agent based solely on the estimated sale price they give you. Rather, you should consider the professionalism and honesty of each agent, whether you have a good rapport with them, the reputation of their company, their proposed marketing plans and most of all, the basis for their estimated selling price.

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“This should be based on a thorough knowledge of current market trends in your area, buyer demand, and a comprehensive market value report that will help you to set a market-related asking price.”

The real estate agent that has presented the most comprehensive market analysis and has a track record of similar sales in the area should be the one you opt for, adds Hoaten.

“Guard against being swayed by charisma and the promise of a high price...”

You should as ensure the agent you choose is properly qualified and in possession of a valid Fidelity Fund Certificate (FFC), Hoaten says.

Sole or open mandate?

Many sellers falsely believe that if they let multiple agencies market their home, they will increase their reach to potential buyers which will enable them to sell quicker. But this is not the case, says Adrian Goslett, chief executive of Re/Max of Southern Africa.

“The truth is that it is often far more effective to sign a sole mandate and allow one agent the space to secure the best sale.”

Hoaten agrees: “With a sole mandate, the seller avoids the risk of a cluttering of listings on the property portals, often at varying prices. Buyers also usually overlook multiple listings.”

Furthermore, working with one agent means the agent can focus all their energy and marketing for a specified period. You can also avoid the risk of multiple agents trying to close the deal at any cost.

“A sole mandate also minimises the risk of double commission and confusion about who introduced the buyer.”

While sole mandates have many advantages over open mandates, the main one, Everitt says, is that it is more effective to have "one message" about your property going out to potential buyers from one agent.

“Having a number of agents ‘hawking’ the property can easily make it look as though you are desperate to sell and result in you receiving lower offers than you should. In fact, we believe that the more agents you have working on your property, the lower the eventual selling price will be.”

Furthermore, he says agents working on an open mandate often end up inadvertently working for buyers rather than the seller, in that they might well try to get the seller to lower the price so that they can take that to prospective buyers and secure the deal, rather than get buyers to try to increase their offers.

Read our latest Home Improver digital magazine below

Listing for the right price

A correctly priced home will match the prices of similar homes in the area, he says, adding that while the pricing of the property is your decision, you should take into account that agents have put a price together using a variety of tools and area knowledge.

“If you are unhappy with your first valuation, it’s a good idea to get a second opinion.”

How low should you go?

If your property has been listed at a market-related price, Hoaten says it should be appropriate to accept 5% to 10% under this price, depending on how the purchase is to be financed.

“Cash is worth a discount based on the certainty involved.”

If you picked your agent correctly and applied the science of setting an attractive asking price for the property, Everitt says you should not be getting offers that are much lower than that.

“The FNB Property Barometer puts the average difference between asking and selling prices at around 10%, but in our experience it is much lower than that where the seller has properly considered the ‘competition’ – that is, what similar homes are for sale in their area and what the asking prices are for those.

“You never want to be the most expensive offering.”

Navigating a bidding war

On the other hand, if your asking price is right, he says you may even get competing offers from more than one buyer, and actually end up getting more than your reasonable asking price.

If you are fortunate to have a few buyers making an offer-to-purchase and the offers are the same, Hoaten says you should determine how the sale will be financed. As a general rule, cash is first prize. This is followed by the buyer with the highest deposit and bond, and then pre-qualified buyers on a 100% bond.

Everitt adds: “Your choice should come down to the offer that contains the best terms to suit your personal situation and relocation plans, and no other suspensive conditions, such as the buyer needing to sell their own property before they can finalise the purchase of your home.”

Could the sale still fall through?

Yes, this is possible in a number of scenarios, Hoaten says.

“The buyer could breach the agreement or the finance application could be unsuccessful. The buyer could also become ill or have an accident. Under certain circumstances the bank could withdraw a bond that has been granted.”

Other reasons include:

  • the buyer failing to get a big enough bond.
  • the bank giving a lower property valuation than expected for a bond and the buyer being unable to pay cash to make up the difference.
  • the buyer getting retrenched after being pre-qualified for a home loan and the bank reconsidering.
  • the buyer's own home sale falling through.
  • the buyer passing away suddenly

However, he says a good agent should be able to find a replacement buyer within a short time.

Start your search for a home to buy, here.

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