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At face value – from the sellers point of view that request sounds logical, but let’s analyze what the seller is really thinking. When you mention the word “reduction” to a seller, he immediately sees his equity going down. He is treating his home as if were a product and that the “reduced” price is what he will get, or maybe lower.
What the seller needs to understand is that his home is a commodity and that new repositioned price is not necessarily where the home will sell. If the energy number turns enough buyers on, then there is no telling where the final sales price will end up.
Regardless of what the selling price is, your commission is adjusted accordingly. The seller is asking you to reduce your fee before he sees how you earn it! It is your responsibility as the seller’s advocate to position the property so that he nets the most money.
Ask him to judge your performance AFTER the negotiation is completed, not before .
Any seller who waits with an offer in hand will lose! First, that offer may not be there in another week, AND if it is the buyer will most likely reduce his offering because there was no other interest. Sellers need to understand that anyone who puts an offer in writing is a serious buyer.
The people coming through Sunday open houses are not ready to make commitments – they are just looking and don’t want any pressure from an agent. If they were real buyers, they would have seen the property with their own agent before the open house. We need to educate sellers that open houses are a means for agents to get more buyers for future sales, not to sell their particular home.
Every once in a blue moon, a buyer purchases a home seen through a Sunday open house, but it’s the exception, not the rule. When you have a good offer in writing, take it and move forward. Do not wait until the moon turns blue!
Has this thought crossed every seller’s mind? Of course!
The key to getting top dollar is exposing your home to the widest pool of buyers and positioning the property so that it is perceived as a great value. Many sellers “think” they can market their home on their own and save the fee.
But let’s take another look. Exposing your home to the widest market comes through access to the MLS where hundreds of real estate professionals are waiting with qualified buyers to view new inventory. By positioning the property competitively in the marketplace, these buyers will funnel through the property and in many cases bid the price up if there is a perception of value. When this situation occurs a third party is needed to manage the negotiation process and counsel buyers to pay top dollar to ensure the purchase. A seller is too close to the transaction to create this situation.
Many sellers have sold on their own and thought they got a good deal, but because of their lack of the widest exposure, it was the buyer who got the good deal.
How often have you heard this statement from a seller???????????????? First we need to address the fact that the seller hired you and your company to market the home (on the listing side), not necessarily to sell the home. When a property is properly positioned in the marketplace, and a perception of value has been created, then the largest number of buyers will be driven through that property. These buyers could be from your office as well as any other in your multiple listing service. It should not matter whose office is showing the property. What matters is if the buyers see a value based on price.
This principle also applies to advertising. Sellers need to understand the true purpose of real estate advertising. It does not sell the particular home, but shifts the buyer pool from one office to another – it makes the phone ring so that an agent can show a buyer all of the inventory within a price range. We can advertise an overpriced listing all day long, but until a property is perceived to be a good value, buyers will not buy!
How many times have we heard this scenario. Historically buyers and sellers DID negotiate to come to terms. In past markets sellers set the price higher so that they could in fact negotiate, and buyers were trained to go in with a lower offer. In the old way of real estate, negotiating meant going back and forth until a deal was struck.
Today’s buyers, however, have not been used to making low offers because of the recent lack of inventory. These buyers have been used to paying OVER the asking price! When properties are well-positioned in the marketplace, buyers perceive the good value, and they buy.
BUT when a property is overpriced and not perceived to be a good value, they do nothing. Until the price turns the buyer on, the seller will sit forever. Until that perception of value is created, today’s buyer will not make an offer.
So the equation is simple-in appreciating market where inventory is low, buyers pay over. In a depreciating market where inventory is high, buyers negotiate down.
It’s unfortunate that some sellers get themselves into this situation. All too often there are even more issues involved besides selling the house. Buyers are not going to buy a seller’s financial problems. They are going to buy because they perceive a good value.
If a seller refinanced or took out a second mortgage and spent that money on trips, cars, etc, then they already spent their equity. As a real estate sales consultant it is our job to educate that seller to the market, and what makes buyers buy or not buy. That education will enable them to position the property so that they can net the highest dollars in order to resolve their financial issues as best they can.
In this scenario a seller needs a professional to help manage the process and minimize their losses, not a magician.
Advertising in real estate has always been misunderstood by sellers. Advertising was designed to make the phone ring, not to sell your particular house. We put ads in the newspapers to get the buyer pool to call our office versus our competition and our job was to get the appointment.
What most sellers have never understood is that when we got the appointment it was our job to show the potential buyer ALL of the inventory in that price range, not just the property advertised. Typically 50% of buyers calling in on ad could spend much more than the property they called in on, and the other 50% were unqualified for the price range.
The odds of a buyer purchasing a home from an ad or an open house are slim at best. The reason you bought the home from the ad or open house was because you saw a perception of value – it was the price that turned you on, not the ad.
Owning real estate is the best investment you will ever make. It is one of the last tax shelters left in America. If the market is in an appreciating cycle, you will sell high AND you will pay high. In a depreciating cycle you will sell low, BUT you will pay less for the new home. Unless you want to “play the market” get in and stay in. Over the long-run you will always win.
The market is the market. Your home is only worth what today’s buyer will pay for it. They will make their decision based on current conditions and their perception of value. While you may not be getting as much for your home as you expected, if you are purchasing another property, it too will have decreased by the same margin. Simply put, if your current home has decreased by 10%, then your next purchase will have decreased by that same percentage (or more if you were planning on moving up) if you are planning a move within your general market area. You should judge a good deal versus a bad one on two transactions not one.
From personal experience I owned a home built in 1800 and to say it was “unique” was an understatement. Thinking that it will take longer is a big mistake and one that you will long regret. Your best and most desirable buyers are always in place in all markets. Don’t wait for tomorrow’s new buyers. Positioning your home so that it looks better than the competition is your key to success. “Unique home owners” often feel they are entitled to more appreciation than other property owners. If your home is positioned at an “energy number,” then all your “unique buyers” will come out in droves.
It is common knowledge that over the past several years the real estate market has gone through the highest levels of appreciation. It is also clear that the cycle is changing. Keep in mind that real estate is like ships in a harbor – they all go up and down with the tide. In certain geographic areas prices have softened, and as inventories build there will be even more pressure put on prices. Remember – prices can only go up when inventories are down, and prices have to go down when inventories build. This thermometer will always guide you in the ever-changing market cycle. That said, your home may be worth less today, but you are still at the top of the cycle. You don’t know the top until prices drop. Sell now knowing you did beat the system. If you had sold three years ago, you would have lost three additional years of appreciation.
Agents have always said, “I will sell your home for the most money in the shortest period of time.” Yet most of them don’t really know why. The answer is that homes do sell at the highest prices quickly for one reason – the best buyers are already in place – qualified and ready to jump when a properly positioned home comes on the market. When all buyers are funneled through the property, that is the best time for high energy and buyer’s emotions to build. Their concern is losing the house to someone else. Buyers viewing the property after the first two weeks are just beginning their homefinding search and are less motivated. Sellers may “think” they have all the time in the world, BUT if they wait, they will lose!
Sounds like a beautiful picture!!!!!!!!!!!!! BUT how many other sellers are thinking the same thing????? Rather than making your decision based on the season, take a look at what the market is doing. If inventory is going off the market faster than it is coming on, then we are in appreciating market and prices have to go up. If on the other hand inventory is pouring on the market faster than it is going off then we are in a depreciating market and prices have to go down. So based on measuring the supply or lack of supply of inventory you will know what direction prices will be going, if prices are going down your highest price is now.
When a property is properly positioned the buyer pool responds with excitement asking “what do I have to do to get this house, to take it off the market?” In this environment an energy price can attract more than one buyer wanting to make an offer. No matter what the cycle, multiple bids only take place when there is a perception of a good deal. Multiple bids are your insurance that the property is worth the price and maybe more. Enjoy!
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