With all the uncertainty tied to the war in Iran, the resulting pause in lowering interest rates, and weakening real estate prices in many markets, the one thing that hasn’t changed is that sellers want the highest possible sales price from their real estate sale.
How prepared are you to meet these six common seller objections that will leave their listing languishing on the market if you fail?
Overpriced listings are the kiss of death in today’s market
Pinpointing the best possible price for a seller’s home can be a challenge, especially if prices are dropping and sales have slowed down. If you allow your sellers to overprice your property in today’s market, it can stay on the market for months.
If values in your area are declining, the longer it takes to sell, the less money the seller will net. Here are common ways sellers can sabotage their sale and how you can help them to price their property right.
1. ‘Yes, but the house down the street listed for … ’
This is one of the most common mistakes that sellers make. They look at what other properties are listed for in their neighborhood and base their price on those numbers. To correctly price their property, they must rely on closed sales, not what they see other properties listed at. The only sales that matter are those that closed.
2. ‘Yes, but I paid … ’
Many sellers believe that what they paid for the property influences their current sales price. “We paid $300,000 for the property three years ago. We have to sell it for at least $318,000 to break even.” This reasoning is based upon a very common fallacy. Many people believe that the agents and the sellers determine the price at which a property will sell.
The truth of the matter is that the real estate market is like the stock market. The buyers — not the sellers or agents — determine whether a property is saleable in any given market. For example, say the seller paid $80 a share for IBM stock, and today it’s selling for $50 a share. If they wanted to sell for $80 per share, they wouldn’t be a seller in today’s market.
The same is true for the seller’s property. The price they paid has no bearing on what the buyer will pay.
3. ‘But what about my improvements and upgrades?’
Many sellers have a challenge understanding how the improvements or upgrades that they have made to the property impact value. Some improvements do increase value. Generally, these include adding square footage or bringing their property up to the same standards as most other properties in the area.
Most improvements, however, make their home more saleable, but they don’t necessarily add to its value.
For example, assume that the sellers have dark green granite countertops throughout their home with dark walnut flooring. These features may make their home more attractive to potential buyers, but they normally don’t add much to the sales price. That’s because those improvements have no value to a buyer who prefers white quartz and plush carpets.
Also, if they over-improve their property by making the home substantially larger than that of their neighbors, they probably won’t recoup that money either.
4. ‘We want to test the market’
Sellers often want to “test” the market: “Let’s list it at a higher price for a few weeks and see what happens.” This is a huge mistake.
Real estate professionals know that all listings have a “honeymoon period” where the listing will have the most showings. This normally takes place during the first 21 days the property is on the market.
Buyers who have not yet found a property attempt to see new listings as soon as they come on the market. This initial rush normally drops off after the first three weeks. After that, showings are normally limited to new buyers coming into the market.
If the seller doesn’t sell during the honeymoon period, there’s a high probability their home will be on the market for an extended period. You can generate additional interest with a price reduction, but it never creates the attention you receive when you first list the property.
5. ‘Let’s wait for the spring market, (for the war to be over, for rates to come down … )’
While activity in real estate does increase during certain times of the year, waiting for a specific season does not guarantee a higher price. Also, no one has any idea how long the war may last or even if rates will come down.
A powerful question, especially if the seller must sell, is to ask, “What is the quality of your alternatives if you don’t sell now?” This question forces them to look at what it would be like if they had to stay where they’re living currently. For some, it may not be an issue, but if they must sell now, then they need to deal with the realities of today’s market.
6. ‘But Zillow says my house is worth more!’
No matter who is using a computer algorithm to price property, there are certain inherent problems with automated valuation models (AVMs), such as Zillow. The first issue is that the algorithm has no real way to take the condition or the interior of the property into consideration.
Instead, automated valuation models are based on mathematical assumptions and are not able to consider special factors that may make the seller’s home valuable. Do they live on a lake? Did they refurbish their kitchen? AVMs should be used as a starting point, not the final judge on what the price should be.
You can use Realtor.com, E-PropertyWatch or HomeSnap as examples of other AVM alternatives. The secret is to ask, “Which one is correct?” You can then point out that the best way to price a property is with a real estate agent (like you) who knows the market and has the latest data available in the CMA you would now give them.
When sellers understand how buyers actually determine what they think the house is worth to them, many of these objections disappear. Your job is not to debate price with the seller but to help them position their home where buyers see it as the best value among the properties currently on the market.
Bernice Ross is president and CEO of BrokerageUP and RealEstateCoach.com, the founder of Profit.RealEstate and a national speaker, author and trainer with over 1,500 published articles.
