Pricing a home is most definitely an art versus a science. Although market data can provide good intelligence about how a home should be priced, there are a variety of factors that go into determining the actual listing price. What the data says, what an agent recommends and what the seller wants are often three different things.
Here are my top five myths that sellers believe about pricing:
1. The higher a home is priced, the better chance the seller has of getting close to their asking price
This is one of the single largest myths in real estate and one that sellers love to latch onto.
It can also be one of the biggest myths for a real estate professional to overcome. Usually, the opposite is true.
Sellers are often disappointed when initial activity is soft and showings seem few and far between. Overpricing results in a loss of valuable marketing that the seller cannot get back.
Subsequently, if a seller relents and agrees to lower the price to what it should have been in the first place, showings do start to happen; but by this time, the property is starting to season, and agents and buyers are taking notice of the days on market.
2. If I give a buyer the closing date they want, I will get my price
Not necessarily. Figuring out an agreeable closing date can often be a dicey issue in a negotiation. Although it would seem rather straightforward, in today’s uber busy world, everyone seems to have a ton of stuff going on including international travel.
If the closing date the buyer wants is when the seller has planned to be out of the country and there is no way they could possibly vacate in time or alternatively, the buyer won’t be available to close when the seller wants.
Relenting on a closing date does not guarantee a seller will get their price, but on the positive side, it might make the transaction go a bit faster if this concession has been made to a buyer.
3. If I include a lot of extras with the sale, that will help me negotiate a higher sale price
This one is a huge wildcard. Everyone already has “stuff” — and too much of it at that.
A seller who assumes that a buyer is going to see a lot of value in including furniture, televisions, the barbecue, Green Eggs and Ham, or the patio and pool furniture might be in for a rude awakening.
If it is really nice, in exceptional condition and very much on trend, then maybe. I’m talking about Restoration Hardware, AirHaus, Frontgate, Pottery Barn and Brown Jordan. Not things from 10 years ago or outdoor furniture that is starting to look worn, corroded or rusted out.
A seller who attempts to push their belongings onto a buyer with a counteroffer risks being highly disappointed on a number of levels. Doing so assumes the buyer sees value in what the seller has and that the buyer will be agreeable to going up in price for the items being included. Often, there is a huge disparity between what the seller thinks furniture items are worth and how a buyer sees it.
Never mind that the seller paid x amount for them, or they were custom made or special order. The word custom only means more to the current owner than another person. After all, one person’s tastes are not another.
Many buyers don’t think it is worth paying significantly more for a home to have a bunch of used stuff. The technology with televisions, for example, changes so rapidly that a buyer might not be interested in televisions that are already 2-3 years old.
A buyer will likely counter back at a lower price and might only want one or two things, to which the seller feels the counteroffer is still too low.
Leave furniture and other items out of the equation until after you’ve reached agreement on price. If a buyer really wants something, they will ask for it as part of the offer.
4. Selling ‘as is’ means the buyer won’t try to lower the price after the inspections
Unfortunately, that might not be the case.
Although a seller can stipulate that they wish to sell “as is” upfront, a buyer will still want to conduct their own due diligence. It’s possible that they’ll get cold feet after inspections, and they might feel that they’re overpaying at the agreed upon contract sales price.
There is always a fear with “as is” purchases that a buyer is taking on far more than what meets the eye. Usually what you can’t see can hurt you the most, and you won’t find out about that until you are well into the renovation project. So a renegotiation can and does happen.
Putting an “as is” on the listing does not protect a seller’s asking or agreed upon price, no matter how low or under market value it may appear to be.
5. If I come down ‘X amount’ in a negotiation, the buyer needs to come up proportionately to what I’ve reduced the price to
No one said real estate was fair. As many attorneys have said, “Justice is what you get in the next life,” and so is the case with selling a home.
A seller may come down $20,000 in a negotiation and the buyer only comes up $10,000 and won’t budge any more than that. Should the buyer come up more? Perhaps, but the proverbial question always ensues: What is the property worth in the eyes of the buyer or seller? This is where the disconnect comes in, and agreement cannot be reached.
The harsh reality about selling a home is that the market rarely thinks as highly of it as a seller does, no matter how nice or well-maintained it is.
The buyer often has a surface level view, and the things that a seller thinks a buyer would zone in on about the house couldn’t be further from the buyer’s mind. This is the glass half-full versus half-empty phenomenon.
Even when a home appears to be well-priced, it is rare that any agent will actually state that in showing feedback in case their customer wants to make an offer.
That voices in agents’ minds that speaks to them as they walk through the home is always spot on. If only sellers could hear that voice, they might see pricing differently.
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