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How Do You Tell A Homeowner? "You Made a Big Mistake!"

Real estate is a tough job, but someone has to do it! As a full time Atlanta real estate agent it is just part of the job to go out on listing appoinments land tell persons the truth wheter you like to or not. It is part of being a professional. We are armed adn loaded with information on a home and neighborhood and area price points and trends. Once the property has been assessed for condition everyone is anxious to sit down to the kitchen table ans listen to the needs and objectives of the seller, and then discuss pricing and sales strategies. I do it differently. If I get a chance before I go to the home, I ask the seller do they have a price in mind? Sometimes they ball park the number or do not give any at all. It allows me to get an idea of their price expectations are they realistic?

When we sit down to the table I customarily ask why are they selling, and what are the sellers trying to accomplish! After listening, and before I give out any Atlanta FREE CMA, I ask the seller again..."What price did you have in mind?" If the home price is off the charts and way to high... I close my presentation book and get up to leave, and say "Sorry, wrong price!" The sellers at first do not know how to take this, but I do this with some humor, and it is meant to create a dialouge. This is where we get to ask some questions on real reasons for sale, job loss, divorce, illness, and yes pending forclosure. It is a time where we can sit down and crunch numbers, and market statistics.

It is also the time where you have to tell the seller the truth.

You made a big mistake:

You overpaid!
You you knew everything about real estate!
You assumed if you had no representation you'd save the commission! You're wrong - you overpaid!
You did not realise you purchased a bad product (one that had sat on the market for years!)
You did not have buyer representation.
You purchased from a For Sale By Owner and overpaid.
You purchased the wrong product (EIFS, on the road, under power lines etc...)
You Purchased Directly from the builder without representation and did not negotiate.
You bought the Amityville House of Horrors!

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Posted by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO on 03/18/2008 09:58 PM

Comments (56)

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Originally posted at: Atlanta Real Estate | Atlanta Housing News for Real Estate: How Do You Tell A Homeowner? "You Made a Big Mistake!"

This post has been included in Georgia Information Fulton County, GA Information Atlanta, GA Information

56 Comments on How Do You Tell A Homeowner? "You Made a Big Mistake!"

MAR

2008

Jim - I am a chicken....I just say the market is soooooo different now.

Linda Lipscomb, Homes for Sale in Henderson County Tn www.lindalipscomb.com

Linda Lipscomb Just give them the facts! Do a lot of research on the numbers before going on the listing appointment! I give sellers a "NET" number based on seller's contributions being deducted!

Now thats how you do it. You have an incedable amount of points. Good Luck.

Regards,

Aldo.

I have a hard time doing that also, when they are looking at me I don`t have the heart to say this home you love is not worth what you think. I try but I am not firm enough.

Jim, I wish more agents did what you have suggested here. I think it is part of the duty of an agent to tell it like they see it. Your approach is very good and not offensive and leads the seller down a path where they really look at their motivations for selling.

Jim, I agree. It's all about the facts. Many try to dispute with emotions, but it's about the numbers that make the facts.

Aldo Di Bacco Enjoy!

Vickie Gambrell We must! It is all about being factual! If we cannot do this, we cannot claim to be professionals! What If I was afraid to tell a person the truth, and by wasitng their time they lose their home into foreclosure? This is the biggest decision they may ever make in their life! If I want to participate, I must give the sellers the hard facts.

Joan Whitebook, ABR, e-Pro, CEBA I think a lot of agents just want the listings. They view it as a prize or a trophy.

Ray Nellum, Fort Smith Real Estate If we stick wiht numbers we do not lose our objectivity! It is not about hte biggest lot, the best nails, it is about averages +/-

I think it is important that we tell our clients what the statistics tell us and where we think we should position ourselves. However, we are ultimately fighting our client's battle and I think it is important to remember this. If someone wants to list way high, I agree. We can refuse that listing. However, I think it is our duty to try to sell it for a higher price if our clients want us to try this, even when I disagree. Once I try and give it my all, my clients are much more likely to come to their senses and will be open to a price reduction. If however we fight over the listing on the basis of price, I am much more likely to loose the client in the long run. Eventhough it might cost me more marketing dollars, I always try to remember that I am fighting for my client's satisfaction in our work and ultimately, their referrals.

Happy selling!

Enrico Pozzo, Coldwell Banker Bain: Seattle Condos, Lofts, Houseboats and all Seattle Real Estate Listings

Jim, telling the truth as a Realtor is tough sometimes but that's when we get to practice our Guidance Counselor skills.

Enrico Pozzo I disagree. The interview has to be on a professional level. I view it as I am the interviewer not the seller. If they want 250K in a 200K neighborhood best of luck to them! I may decide to tank them for their time, hand them our card and leave on very good terms. If they are reasonable and want to list it at 210K that may be reasonable, but if they are outside a saleable range...why bother? It even violates NAR Code of Ethics! I take nothing overpriced especially in this market and it allows my seller to have a good chance to sell, but if they are overpriced for even the shortest while it makes the difference that they may have missed the market altogether.

Good post Jim as always. What if they purchased this home from you in 2005 when the market was hot and it was not overpriced, but now it would be if it was listed for what they paid for it? I certainly can not say any of the above things. lol.

Good postr Jim. I see this every day out here because 80% of our sales are REO's and the rest are short sales. People want you to come in and lie to them and tell them that even though there are 5 identical homes selling for 400,000, their's is worth the 650,000 they paid for it. You've gotta have your facts and they'll respect your professionalism if you give it to them. That's not t plus a profit. That doesn'e mean they won't turn around and list with somebody who blows smoke up their keister but at least they know the truth and I'm not wasting my marketing dollars on a house that's never going to sell. Sorry Enrico - I'll take the listing after it expires when they're ready to get it sold - and if it's a short sale I won't even take it then.

Megan McGonigal You just tell them the truth! You did not create the economy we are in. (If you did, I want to speak to you!) The economy is an external force. So are the number of homes you compete with, the mortgage rates etc. In normal times a home purchase is a long term event. In the past few years we in this industry have lost sight of that! A home is normally not a purchase that will be redeemed in 6 months or 2 years. The normal time in a normal market to recoup cost could be at least 3 years to cover commissions. This market is showing declines

MAR

2008

Gene Wunderlich Selling Southwest California Gene I totally agree! We need to view ourselves as professionals! Grow up guys.... We either are, or we are not and need to leave real estate.

Does a Doctor Say:

I know you had cancer but I did not want to tell you! I'd be too uncomfortable!
I thought you'd get really upset if I told you had a disease!
I did not want to be the one to tell you that your needed surgery to remove the tumor!

I did and they understand. It was a second home, they are investors and it's paid off, but still it sucks to see them losing money instead of making money after owning it for almost 3 years. Especially since I sold it to them.

Megan McGonigal I always try to negotiate and get the best possible deal for my buyers. It is their money. I do my absolute best to get them the best possible value. Sometimes I cannot do that. Perhaps there are other offers, competition, or the buyer gets emotionally involved in one home. If something goes wrong like September 11 2001, prices and deals stopped then also! Loads of folks here in Atlanta lost their jobs overnight! Some folks were very happy to sell the home at a time where no one was out buying. It is a job, and as long as I do the right thing, tell the truth the sellers have to make up their mind. Do they want to sell right now? It is like going into a pool, in the early morning, the water is cooler than the later afternoon on a bright sunny day. An investor should understand the risks. Above all, we are only their agents - I give them the facts they make up their mind and then I act on their behalf!

Jim - If we don't tell them the truth... who will? I see agents every day that list homes based on what the seller wanted/needed and not on how the market is performing. That's a disservice to the client and to our profession.

We sometimes don't make friends when we do it, but the truth-the whole truth-and nothing but the truth is the only way to live. I can't sugarcoat things like this.

It seems like a no brainer to me, that we shouldn't take ridiculously overpriced listings just to ge the listing. But we all know real estate agents who do just that. Sometimes however, the market shifts so quickly that what seemed like a fair market price when we take the listing turns out to be totally wrong. This happened to me last August when I sold a family a new home with reasonable assurance that I could sell their existing home within three months. They could afford to move into their new house and wait for their old home to sell. Then a sudden shift in the market in their area of Northern Virginia caused a substantial drop in average sales prices. Getting them to see the reality of the market and the need to lower the price was hard. They had refused to remodel their 1976 kitchen as we had asked and the feedback everytime it is shown is that the kitchen needs updating. We've dropped the price twice now and offered a $5K bonus to the selling agent. Now we may have to rent it. Fortunately they can afford to carry two mortgages for a while longer. But even knowing this I feel a certain amount of angst that I helped to put them in this position even knowing that I did my best to price the home correctly in the beginning.

Interesting......most times you see a post like this no one dares comment that they will still take an over-priced listing. It seems obvious that you posted the "known" but in a way that people weren't afraid to comment the truth! You have such a way with that Jim! Now, about the post? Spot on. You have to tell the truth - it earns you respect. It may not earn you the listing but there are many more out there with sellers that are reasonable, flexible and want to sell their home.

Jim,

Just part of the never ending story to over pricing when things will not get better anytime soon I'm sorry to say...well let's not say better ...how about back to normal.

Jim: You ABSOLUTELY have to get the price right--especially in our current market (probably like none before)! I did have a hard time getting past your graphic!!! Great post.

Jim It has been my experience that folks 'can't handle the truth'. OH they say they want it but they don't! The truth often says to us that we are wrong and we made a mistake and NOBODY wants to be wrong. In my market I KNOW I have lost listings because the sellers don't want the truth. AND my competition will absolutely line up and say WHAT EVER the seller wants to hear to get the listing. They sugarcoat, and whitewash and tiptoe all around the truth. Oh they get the listings but what do they really get... an unrealistic, often demanding,and ultimately disappointed seller who can't sell their overpriced property!

Kathy Fisher REMAX Realtor Lexington TN

The truth will set them free but they will not always like it and may not receive it from you but our job is not to inflate prices to make the seller feel good. Our job is to give an honest assessment of the property and present it to the seller. Sometimes we need to have thick skin. It is not personal it is just facts.

Jesse & Kathy Clifton - Fairbanks Alaska Real Estate Agents that list based on sellers needs without reconciling it to the market are foolish and need to leave the business. Other agents will not show or sell, sellers will reject good offers, and while time is being wasted sellers lose equity, pay taxes, and continue making mortgage payments.

Kris Wales- Metro Detroit real estate agent-Chesterfield Twp-Macomb County MI It is the recipe for success!

Gayle Fleming In good times it is not unusual to pad the price a little for negotiations. In times like this, we have to price only in the sold range, no padding, and subtract for negatives. We are shooting moving targets! It is like a sharpshooter actually allowing for wind, speed of the moving target and the equipment he is using. Sometimes we have to shoot even before the target is range.

Leesa L. Finley, REALTOR® In the early 90's when we were in some extremely soft times, I used to work the Expired listings. It was not uncommon to interview someone, tell them the truth and they list with someone else. They would call me back after they expired the 3rd time.

Neal Bloom-Realtor ® Assoc.-CRS-Weston FL I like that! We are heading back to normal times! What a lot of folks sellers and agents don't know that "PRICE OVERCOMES ALL OBJECTIONS!"

Debe Maxwell Thanks! No matter what this issues are it always comes back to price!

You have to give them the facts. If you don't, you have nothing to offer. If, after giving the home owner or buyer the facts, they persist in sticking with "their program", there is nothing to do but politely bow out.

The last thing an agent needs is to join and enable the consumer into making more mistakes.

They either don't know what they're doing or refuse to accept the facts.

Either way, we can only help if they listen.

Kathy Fisher My conscience handles the truth very well! Most agents do not know what is at stake when selling a home! Anxiety, angst, finances, families, marriages, college funds, harmony, peace of mind, serenity! If someone is lame enough to skip over the really important facts and statistics and screw someone because of their weakness...I'm a firm believer that they will at sometime be accountable for their actions.

Homefinders, Real Estate in MD & VA, Lenn Harley, Broker, New & Resale Homes I agree! It's all in the facts! I agree, we cannot join in the enabling, and we can only help if they want our help!

And to the people worried about what they told their buyers a year or two ago - real estate is a cyclical market. At the time you bought, nobody, NOBODY including the experts, foresaw the swing we were going to have. You got a great deal at the time and given time it will be a great deal again. Anybody who invests in real estate for the long term will make money - if you're looking for a 2 year investment, then timing is critical whether it's a house or a stock or whatever. If I gave people the facts and helped them get the best deal they could, my conscience is clear and I know that ultimately they will do well - besides, they have a lovely home to live in until values come back.

It's definitely hard to be real with seller's sometimes because we all have the desire inside of us to not crush people and to get the listing.

Good post! I think it's important for sellers to hear the honest truth when it comes to the price of their home. I really like what you do by getting up and saying "sorry wrong price!" wow! That is a great idea, not sure if I would be brave enough to do it but I like it!

I love your reasons. I am trying to keep a couple of friends from making that mistake. They really do believe the builder when he says he can save them money if they don't bring in an agent. It is so frustrating.

Gene Wunderlich Selling Southwest California Real estate is cyclical! Our contracts in Georgia reaffirm that we make no representation on appreciation or future value!

"Buyer and Seller agree that Brokers shall not be responsible to advise Buyer and Seller on any matter including but not limited to the following: any matter which could have been revealed through a survey, title search or inspection of Property; the condition of Property, any portion thereof, or any item therein; building products and construction techniques; the necessity or cost of any repairs to Property; mold; hazardous or toxic materials or substances; termites and other wood destroying organisms; the tax or legal consequences of this Agreement and transaction; the availability and cost of utilities or community amenities; the appraised or future value of Property; any condition(s) existing off Property which may affect Property; the terms, conditions and availability of financing; and the uses and zoning of Property whether permitted or proposed. Buyer and Seller acknowledge that Brokers are not experts with respect to the above matters and that, if any of these matters or any other matters are of concern to them, they should seek independent expert advice relative thereto. Buyer and Seller acknowledge that Brokers shall not be responsible to monitor or supervise any portion of any construction or repairs to Property and that such tasks clearly fall outside the scope of real estate brokerage services."

Scott Williams -Agent, Defiance Ohio Real Estate To me it is not about getting the listing, it has to be the right listing!

Colorado Springs Realty Patricia Beck I'm a New Yorker! It comes natural! LOL! You have to make it a joke! You also have to know your audience. Some people I can easily do this with and some I can't!

Latonia Parks Do you know how many builder tell your client to come back to the new homes subdivision wihtout your agent? A lot of them do! And here is what I have found they purchased:

Homes in a designated flood zone that requires flood insurance!
Cracked Foundation Slabs
Homes with an easement or on top of a land fill!
Homes on top of septic tanks
Home that have structural problems
Homes with known mildew problems (wicking problems)
Homes without footers.
Homes next to roads that are going to widen.
Homes next to airports.
Grossly overpriced homes.
Homes that have been on the market for 2 years plus!

It is always the best to be truthful up front. I like your points also. Time for the buyers to wake up.

Cheryl S Glover, CRS, CIPS, GRI, TRC, Clermont,Fl A good sale begins with the right purchase!

Over priced listings do no one a favor. Great post Jim.

Keith & Robin Perry - REALTOR® -West Metro Atlanta Thanks!

Jim: I spent hours today trying to come up with a suggested listing price for a presentation I am getting together. It's not easy anymore. When do you use foreclosures in your CMAs?, for instance.

I never will forget a listing I had a couple of years ago. The seller lived in another state; he had bought the home as an investment. The home's pool encroached on the septic field, and the ladies with the big skirts were on the adjoining property. The investor had spent a lot of money on the inside and it was in perfect condition. It was a good learning experience for a first-time investor who had bought the property at an auction with no help from a real estate agent. It was a perfect home for the buyer because it had the pool she wanted and was a price she could afford... thank heavens! It was very difficult to come up with a listing price on that one...

Hi Jim,
The truth is a bitter pill sometimes but the quicker one gets it down, the sooner the healing process can begin.

Jan Wood, Realtor (R) - Nashville TN Real Estate Ouch! We call that "Bells and Whistle Selling!" The builders or sellers load the home up withall the extras so that your emotion says "BUY!"

Cynthia Tilghman, Realtor® Onslow County NC Home Specialist Some sellers do not take it that way! They take it as a personal attack on themselves. An indictment of their own stupidity. It isn't! It is merely looking at all the facts!

MAR

2008

I believe in presenting the facts and telling them what the real deal is. Afterall, that's what they are expecting from a Real Estate Professional. It may not be what they want to hear and I might not get the listing but then I don't want the listing if it's overpriced and the seller isn't willing to accept the facts.

Donna Yates, Georgia Realtor, N GA Blue Ridge Mountains Real Estate Donna the difference is that you get it, most agents do not. They are afraid of telling the seller the truth. The agents are afraid of being rejected if they tell the truth! The fact is they should feel like a reject for not being man/woman enough to lay the facts out on the table. In our own minds we have a range that the home can list for, if it outside the range and the seller's won't reason....Goodbye! This is a market it cannot be padded in price at all! It has to be market or below market pricing because of current market conditions!

I've told two potential sellers "the truth" recently, and as a result, one of them has decided not to list right now but to wait (they would have to bring money to the table to close if they did sell now) and the other will probably list, but with an agent who will tell them what they want to hear (they bought new construction directly from the builder and it hasn't had time to appreciate and nothing has sold over what they paid for their home in the past 24 months). Such is the life of an agent who tells it like it is!

Kelly Sibilsky ~ Lake Zurich, IL RE/MAX Real Estate Agent ...but neither are sales anyway! There was no loss because you told the truth!

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