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Perception is Reality

By Mitch Gover

Services for Real Estate Pros with BidOnRealty.com

February 21, 2011 10:32 AM

I went to an open house yesterday for an REO listing by an agent who's thinking about utilizing our system to auction their listings. It immediately made me think of Greg Nino's post from the other day. People want to point out all the negatives in a property in an attempt at negotiating down the price. Do they really think the Seller or the Listing Agent cares what they perceive to be negatives? This was a foreclosure/REO listing for God's sake. The negatives were rather obvious(worn, dirty carpets, baseboards missing, overgrown landscaping). One couple had to make a point of saying that it would take at least $60,000 to get the property "right". No kidding. Pointing that out to a Seller or Listing Agent is irrelevant. Offer what you will for a property based upon whatever research you have done and what you believe your anticipated cost will be to get the property into a condition that will satisfy you.

It seems there must be a better way to negotiate the price of real estate dispassionately. Buyers nowadays have more information about properties today via the internet than Realtors® did not too long ago. Find a good Realtor® to work with, one who will advise you and give you resources to get the best information possible, but not screw up the negotiation process by insulting the Seller with ridiculous low-ball offers backed up by a dissertation about all of the negatives in a property. You should be free to bid what you want for a property dispassionately, and based on facts, not drama.

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BidOnRealty.com is a new, multi-faceted online price negotiation platform for residential real estate transactions. It enables Realtors® to hold their own online auctions, and also features "Make Offer" and "Buy Now" modules. It works for foreclosure/REO properties, Short Sales and Non-Distressed properties. It can save Realtors®, Buyers and Sellers countless hours of needless "paper chasing" on every transaction.

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Christianne O'Malley

Dickson Realty - Reno, NV

Exceptional Service - Delivering Results in Reno!

The other amazing thing is that the buyers think they have a decent grasp on how much it's REALLY going to cost to rehabilitate these homes. We are bank owned agents as well and have actually rehabbed homes for banks when it made more sense to do so. We have found that buyers traditionally overestimate the costs to bring a home back to "acceptable" standards by almost double. They need to learn to make the distinctions between what they want and what would be required. A new kitchen is nice, but just because the kitchen cabinets are dated, it doesn't mean the kitchen is functionally obsolete...Buyer mentality is fascinating these days.

Feb 21, 2011 10:43 AM

James Harner

Considering Selling Your Home? Call 610-310-7646 first - Royersford, PA

James Harner Group - Philadelphia PA Real Estate

Well, at least being realtors, we know the truth...and lets just hope that our clients will listen to us (esp if we're on the buyers' side).

Thanks for the post, Mitch!

Feb 21, 2011 11:10 AM

Mitch Gover

BidOnRealty.com - Orlando, FL

Christianne - Very true. Many "amateur" investors tend to over-do things a bit. Personally, I think it's the professional investors that will lead us out of this mess. Buy Low - Sell High (or at least higher).

James - Yes, let's hope they listen. It's tough with all of the information overload they can get, but I still think too much info is better than not enough.

Thanks for the comments.

Feb 21, 2011 01:10 PM

Chris Mayr

D3 Interactive Marketing - Orlando, FL

But it is going to take $30k to make that kitchen usable. I mean a formica counter top - The insanity. I can't cook on anything but granite and if I have to use a stove that is not stainless steel, I may not be able to eat.

Feb 22, 2011 02:39 AM

Ain't that the truth Chris.

Feb 22, 2011 02:46 AM

Carol Bauza

Charles Rutenberg Realty - Orlando, FL

Great post Mitch!!!!

It always facinates me when people, especially neighbors come to an open house and totally disect the home...tell you it's going to take AT LEAST 100K to rehab...and they wouldn't give you 100K for it to begin with...LOL! What they don't realize is, yes it may need updating, and a granite countertop would be nice...but you want to sell for as much as possible as it is THEIR market value that has been violated! I enjoy open houses as I do get to meet some colorful characters! And if I sell THAT house....BONUS!

Thanks for "keepin' it real"!

Feb 23, 2011 02:04 AM

Fredrick Joey

Do Hard Money - Salt Lake City, UT

Do Hard Money

That's why I havea lways believed in the fact that one shouldnt get emotional about the property. It's your business and you need to be very practical about it. Evaluate the pros and cons and then enter into it.

Feb 24, 2011 03:32 AM

Hannah Williams

HomeStarr Realty - Philadelphia, PA

Expertise NE Philadelphia & Bucks 215-820-3376

Nice post..Very good points here

Hannah

Mar 06, 2011 12:31 PM

Glenn Roberts

Retired - Seattle, WA

There is a place for passion in the home-buying process, just as there is a place for a rational study of the facts. The situation you mention, Mitch, is a discussion the Realtor and the client should have after an on-site examination of the property. I totally agree that the Realtor who feels they have to point out a property's short-comings to the seller and LA is misguiding their own energy and any hope for a successful negotiation.

A buyer should love a house before they begin the process of buying/negotiating it.

An investor should love the potential for income or appreciation before they proceed.

And then:

The house should match the buyers needs and abilities.

The investor must have the abilities to make the project work.

Mar 20, 2011 04:57 AM

Very true Glenn. I especially like your take on the passion part.

"A buyer should love a house before they begin the process of buying/negotiating it."

Then they should have a dispassionate way to arrive at their contract price. Thanks for the comment.

Mar 20, 2011 05:16 AM

J. Philip Faranda

Howard Hanna Rand Realty - Yorktown Heights, NY

Associate Broker / Office Manager

Mitch, I got here via Alan May's post pimping you. Very thought provoking stuff. It seems that as long as buyers percieve that they have leverage, they'll try to press their self interest. I don't blame them, but in the cases where there is competition for the house and they are outbid, their shock is notable. It isn't supposed to happen that way. But actually, no matter how bad the market is, a good value won't remain a secret and there will be interest. Some buyers have to lose a place before they get realistic and understand this isn't a flea market.

Mar 21, 2011 02:06 AM

Hello Philip, and thanks for the comment. That Alan is quite the pimp, I mean character huh? I think you hit the nail on the head here. Once a buyer gets a cold hard dose of reality, they think twice about their strategy.

Mar 21, 2011 02:16 AM

Perception is Reality

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