How Not to Buy A Home - Develop An Irrational Aversion to List Price

By
Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795
https://activerain.com/droplet/4vGW

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*

Posted by

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

close

Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Mike Cooper, GRI 04/06/2013 12:19 PM
  2. Lynn B. Friedman 10/05/2013 12:02 PM
  3. Tony and Suzanne Marriott, Associate Brokers 10/26/2015 12:01 AM
  4. Steffy Hristova 10/26/2015 12:37 AM
Topic:
Real Estate Best Practices
Groups:
LATE NIGHT - EARLY MORNING AT ACTIVERAIN
Voice of Reason
Bananatude
Bartender, Make it a Double
Tags:
list price aversion

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
171,858
Randy Bocook
Keller Williams Coastal Area Partners - Richmond Hill, GA
Selling Coastal Georgia

Most buyers view the list price as a "suggestion" rather than what the property is actually worth. You are so right that in this market most everyone is set on negotiating. 

Apr 07, 2013 08:52 PM #31
Rainmaker
561,561
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

Aversion to list prices seems to be a residual effect from the buyer's market that has prevailed in recent years. It's a knee-jerk reaction, not unlike the buyer who wants their agent to offer discount rates for full brokerage services.

Unfortunately, these buyers have to lose a couple of homes before the light goes on that the real estate market is changing.

Apr 08, 2013 01:02 AM #32
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Christine - Yes, I think for some it is purely psychological.  No matter what the seller wants -- they don't want to pay it.

Mark - I guess that's true.  I find usually it is an outside advisor who is fact deprived.

Tanya - You're right, eventually most people do.

Thanks Joan - I agree.  For me, that is the key.

Sharon - There definitely was some desperation coming form the agent.  None from the seller though -- that price said nothing about motivation.  LOL.

Apr 09, 2013 06:59 AM #33
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Lloyd - I don't know precisely what causes it, but yes with some it is deep rooted!  LOL.  Right now it is very painful to watch as the market continues to move at a steady clip!

Lenn - I think you are exacty right.  When you really want a home you buy it. You don't just throw out any old kind of offer.

Randy - In my market, they will find themselves in a conversation with themselves.  Seller's are calling the shots here.

Eric - That seems to do the trick for most.  And then there are some...

Apr 09, 2013 07:05 AM #34
Rainmaker
722,100
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Tni-Never pay retail, never pay list price-so many rules of thumb that keep people from getting what they truly want.

Apr 09, 2013 01:49 PM #35
Ambassador
1,651,000
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Tni in a buyer's market this is the wrong approach.  The buyer's not wanting to negotiate well, are the ones who are usually very disappointed about losing a property.

Apr 09, 2013 04:37 PM #36
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Hi Wayne - I guess that is the thinking.  Rules of thumb don't always apply.  I guess also because we see it in action we know that.  It's painful to see people adhere to a rule of thumb and lose a house they really want.

Jennifer - You're right in a seller's market, a buyer isn't going to get anywhere using this approach.  I always go over the issues with them well, but yes you are right they are always still disappointed by not getting the home even though I've told them this is a possibility given their approach.

Apr 09, 2013 11:09 PM #37
Rainmaker
303,859
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Tni~This is so spot on! The market is changing, and would-be negotiators have to recognize that fact.

 

I sometimes list homes that are being marketed by a lender following the death of a homeowner who had a reverse mortgage. In those cases, the lender will only sell the house for list price or above. There is no need to make a below list offer, because it will always be countered at list. You won't believe the number of agents who are offended by that!

May 04, 2013 12:39 PM #38
Rainmaker
2,189,507
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

You would think, Tni, that you can educate the ignorant but that's not always the case. They would have to listen to you for that to work.

On the other hand, agents who put "motivated seller" in their listings are basically saying: hey, we all know the home is overpriced, and I'd tell you the home is overpriced myself but I can't because I represent the seller, and to do so would violate my fiduciary relationship, so I am telling you in a convoluted way in hopes that you will pick it up and realize that once we start negotiations, I am wholly confident we can reduce the sales price and reach an agreeable price point because my seller is too pig-headed to offer a reasonable sales price to you in the first place like any reasonably intelligent seller would do. The seller wants you to negotiate with him, so please play with us because without you, I can't make the seller do anything but together we can beat the guy into submission.

May 29, 2013 04:09 AM #39
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Hi Liz Lockhart  - Like it or not there are situations where there is not much bargaining to be done.  Don't lose the house of your dreams because of theory -- you need to pay attention to the market and the situation.

Hi Elizabeth - Very true.  Often times we just have to let people learn. I just really hate it when you see that they are losing the perfect house and there won't be another one.  They still do it though even if I talk to them night and day and show fact after fact.  The shock though when you tell them that they didn't get the house.  It's as if they can't believe it.

I love the "motivated seller" comments on overpriced listings.  In my experience those words mean very little.  Show me your motivation -- lower the price!  LOL. 

May 29, 2013 06:48 AM #40
Rainmaker
1,785,800
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Great post way back then I missed but echoes all that I feel with offers and some buyers short sale or not!  Hope business is cruising for you Tni...check in on G+ a bit.

Jun 02, 2013 09:40 PM #41
Ambassador
3,674,552
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Tni, here in DC an aversion to the list price atually helps.  The question is how much over the asking price will they have to go?

Aug 01, 2013 12:14 PM #42
Rainer
166,435
Demarco & Marisa
Remax Kings Realty - Riverside, CA
"The Choice is Clear!"

Hi Tni, Those are the fun buyers that refuse to pay list. Before I move on I always ask them, how badly do you want to "buy" a home? Are we kicking tires or real buyers? Time is too short for the "I don't want to play by today's rules" buyer. ~Marisa

 

Aug 22, 2013 06:28 PM #43
Ambassador
892,315
Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Dear Tni -

If anything, this post is MORE true now even than when you first wrote it. In certain areas of Atlanta, we are seeing some homes go under contract in less than a week on the market. I had to get my current Buyer to go OVER the List price to get the home he wanted. 

It is not a Buyer's market here any more - not in the area where I am working!

Have a happy day -
Lynn

Oct 05, 2013 11:48 AM #44
Ambassador
4,298,642
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Tni, this is a perfect description of one of my buyers - love the way they claim that they can't pay the full price! Just thinking what would that buyer think if I share the link to your post....should I dare?

Oct 05, 2013 03:17 PM #45
Rainmaker
518,702
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Thanks for this post, Tni.  Some buyers here at Orange County insist on seeing a seller price reduction to show motivation.  However, they forget that smart sellers will to research with their agents and list according to true expected selling prices - not just seller dream territory.

Dec 05, 2013 02:37 AM #46
Rainmaker
303,859
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Tni~Just yesterday, an investor who has made offers through other agents on several of my listings called and offered to take me to lunch. He wants advice on how to actually "get" one of my listings. After first determining that he does not have an agency relationship in place, I agreed to meet him and his partner. I think I'll take a copy of your blog with me!

Jan 10, 2014 11:29 AM #47
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Hi Liz !

Good luck with that one! 

Sounds like he doesn't "get it," and that of course is why he is not "getting" one of your listings.  If the winning offers are not confidential I would bring those details too!

Hope you had a great holiday season!

Cheers,

Tni

Jan 10, 2014 11:42 AM #48
Ambassador
2,667,501
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Hi Tni, informative post like this is really helpful. Thank you for always sharing with us a good article like this. Keep it up!

Apr 25, 2014 11:15 PM #49
Rainmaker
3,050,725
Tony and Suzanne Marriott, Associate Brokers
BVO Luxury Group @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Tni LeBlanc "So, deciding that you will never pay list price might also mean that you will never negotiate reasonably with reasonable people."  So true - and this gem is my re-blog for today!

Oct 26, 2015 12:00 AM #50
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
414,502

Tni LeBlanc, Realtor®, J.D.

Tenacious Tni (805) 878-9879
Ask me a question
*
*
*
*
Spam prevention

Additional Information