inflated ideas about their home value

By
Real Estate Agent with Re/Max 10 New Lenox Illinois

Unrealistic Seller Pricing?  My respected colleague Scott Levitt of Oakley Sign company inspired me to share this question -

Price Reduced Sign Q: Often Sellers who will become buyers have inflated ideas about their home value, primarily because of "upgrades" they perceive to be high-value.  How do I reason with them?

A: First, I make absolutely sure I'm willing to stand behind the price I've proposed.   When I know I've done thorough research about the immediate market place, I'm confident I'm recommending the appropriate price for the home to be priced right, I give this response:

"I absolutely understand you want the maximum value for your home. My job is to do everything in my power to secure the best closing price possible. However, I have to be honest and tell you that I can only list a house with a price I can defend in the current market.

I refer back to the com-parables again and again if needed to help the Seller understand, even if I were to find a Buyer who were to agree to the Seller's price, if financing the purchase, the Buyer's financing would depend upon a successful appraisal. 

While your recent cosmetic upgrades add considerable value and appeal in your estimation, they only do so if the Buyer feels the same way, and the appraiser as well.  The hardest part is when I find a delicate way to say to them you may love your sleek, modern improvements, but to some Buyers they might see your upgrades as cold and want to have them replaced. So you see, in that case, they're a drag on price.

In addition, I remind them the Buyers also have access to the same com-parables the Seller has reviewed, and will make an offer based upon their thorough research of the market-place.  Plus, they have had the advantage of personally touring and comparing all of the competing homes.

I walk the Sellers through the step-by-step process I used to arrive at the ideal price for their home, and demonstrate my confidence of the best price to optimally placed their home in this Chicago-land market.  I remind them I have to defend this price against the Buyers' agent as well, so I want to convince them to convince their client it's fair to both parties."

I express the sweet spot for a new listing on the market is the first two to three weeks, and it won't help so much to rapidly reduce the inflated price when reality sets in.

If the Seller persists with unrealistic pricing, I ask them to really consider if it is worth it to endure the experience of having their home sit on the market for an extended period of time to only eventually get discouraged? 

Politely, I may resolve to decline the listing if I feel it will languish on the market, and the Seller refuses to list at the right price, nor allow me sway their opinion on the spot upon review of the best comparables reflecting where their home should be priced.

1.800.373.5330 - to order signs directly from Scott.

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Topic:
Real Estate Best Practices
Location:
Illinois Will County Frankfort
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inflated ideas about their home value

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Rainmaker
1,408,090
Jeffrey DiMuria 321.223.6253 Waves Realty
Waves Realty - Melbourne, FL
Florida Space Coast Homes
Dale...I sometimes point out to sellers the value of the upgrade was more than dollars. A new bath or kitchen made your life better or easier. The value in dollars is market driven...the value to your life was priceless.
Sep 18, 2012 03:49 AM #1
Rainmaker
233,475
Dale Taylor
Re/Max 10 New Lenox Illinois - Frankfort, IL
Realtor = Chicago Illinois Homes Townhomes Condos

Thanks Jeffrey for sharing - I really like how to you put that!

Sep 18, 2012 03:51 AM #2
Rainmaker
178,980
Janelle Ancillotti
Seneca Home Staging - Syracuse, NY
HSR Certified Home Stager, Syracuse, NY

Great Article Dale. I'm not a realtor, but I can see that it is difficult to convince some sellers even when there are numerous comparables, so I can imagine the difficulty many realtors in my area face when there just aren't that many (or ANY) comparables that aren't a stretch when looking at location, age, amenities, and even size.

Sep 18, 2012 03:52 AM #3
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Rainmaker
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Dale Taylor

Realtor = Chicago Illinois Homes Townhomes Condos
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