How Not to Buy A Home - Develop An Irrational Aversion to List Price
I’ve seen it happen to even the most eager of buyers. List price aversion. It’s an awful malady when it hits. Some people are born that way -- they wouldn’t pay list price even if you paid them to. Seriously. Other people are made that way, the usual culprit is a third party who wants to test out their own unproven theory of negotiation on your property purchase. (Great -- can you go live at their house when this is all over?) I’ve heard the advice given and repeated so many times “Don’t pay list price,” or “I don’t want to offer asking!” Let’s face it, to some people, the list price is for idiots. That’s just the way they view things. Now, if the list price is absurd, I’m right there with you. However, the list price is not ALWAYS absurd.
If you won’t pay list price that means -- that whatever the seller is asking -- you will not pay it. Why? If the list price is fair or attractive -- why wouldn’t you pay it? Not every seller has overpriced their property. Look at the facts before you make an offer. Ask your agent for the information you need, days on market, past sales, price per square foot, and market activity at that price point. It is a mistake to develop a negotiation strategy in a vacuum. You have to be informed about the market and the particular market for that property. Then you can decide how you want to approach the matter. In fact, smart sellers price their property dead on, and some sellers price their property low because they want to increase market activity, encourage a bidding war, and get the most favorable terms for the sale of their property.
One particular situation comes to mind. It wasn’t my buyer. The list price was actually quite arbitrary. It was a short sale and the bank set the original price (and I thought too low given the unique appeal of the property). We had a lot of great offers, and set up a deadline. We only countered the top offers, and made everyone come up to the same price. I guess that was the problem for this buyer... we asked. Because we asked ... he didn’t want to do it. Now he had the strongest offer... but not the best attitude. Instead he countered back in a multiple counter offer situation asking for his closing costs to be paid. Of course, he did not get the house. I heard later about how devastated his family was to not get that property ... but their chief negotiator’s problem was he just couldn’t get himself to pay what we asked, even though it was reasonable. Truly, it was painful to watch someone shoot themselves in the foot like that out of adherence to a misguided principle. And who wants to be in contract with an unreasonable person?
Of course, real estate agents know that the more motivated a seller is, the more reasonably he or she will price the property. So, deciding that you will never pay list price might also mean that you will never negotiate reasonably with reasonable people. Indeed, if you take that approach, you will probably end up negotiating with a lot of unreasonable and unmotivated sellers, the reasonable sellers will likely just ignore you... because they can.
Recently I saw an overpriced listing where the agent actually put in the public remarks “VERY MOTIVATED SELLER!” I laughed out loud when I read it. As if the capital letters and statement alone could take away the impact of the price. Get real. Well priced properties say that without saying it. And if the list price is reasonable, you may want to pay... what they asked.
Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She has successfully completed short sales with Bank of America, Wells Fargo, CHASE , GMAC, Seterus, IndyMac, CitiMortgage, Green Tree Servicing, Specialized Loan Servicing, HomEq Servicing, Wachovia, Coast Hills Federal Credit Union, Select Portfolio Servicing, Fannie Mae, Freddie Mac, and others.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Tni LeBlanc and MInt properties are not affiliated or endorsed by any lender.
Copyright ©2013 Tni LeBlanc *How Not to Buy A Home - Develop An Irrational Aversion to List Price*