What Does A Seller Reveal When They Want A Negotiation Cushion on the Listing?

Home owners should price the home correctly when they list it .

Ed, you are right they need to adjust their thinking.  The road they want to travel will mostly prove costly in the end.

And by the way, I am sure their thinking will be the opposite when it comes to purchasing their next house.

Overpriced homes don't get the showings and offers are typically low-balled to counter an unrealistic seller, whereas below-market prices, especially in a buyer's market, are a sigbal that the seller is looking for multiple offers and a bidding war, which i caution my buyers to avoid.

I see that too in my area Ed Silva It is rather difficult to deal with as it is not worth the energy or time to list an over priced home. They end up with less money in the end. Difficult for sure!! 

Well price homes in good condition are flying of the market in So. NH.  It is not a good idea to overprice and then "test" the market.  I have never see this work out well for the seller.

By setting their list price 10% over market, these sellers are really running the risk of selling for less than they want as buyers adjust their offer price for the long days on market. And the time lost in selling may also mean opportunities lost in buying.

Ed Silva when table turns, they change their color....

I don't a cushion, but 10% seems a little high for a cushion.  You have to worry about appraisals too.

Hello Ed and VB is with William and David on their comments ;o)

wiggle room can wiggle the Sellers right out of the buyers who could have offered the price the home was worth early in the listing...sigh.

All sellers want a negotiating cushion--it's a question of how much. I always tell sellers that the more accurate a price, the quicker we get an offer and the less of a cusion they need to negotiate.

I just finished one of these. Dead set on a price until I wrote them an email which enabled them to see my point in writing. Eye to eye made it too emotional. They then came around.

Some sellers just won't take our advice.  They might listen to other professionals in their lives, but when it comes to the sale of their home, they are so afraid of leaving money on the table.  Sadly, this tactic results in getting less money, not more.

Ed I just got done with a seller that had that same idea but after seeing it in black and white he came around thankfully. For some reason in that neighborhood sellers 'think' they should price higher because so and so is priced  and we have the same type of home. As it turned out history told a different story.  All the sellers who priced too high, stayed on the market for months and months and then were reduced to market value. Almost every single seller - odd to say the least.  I asked the guy - do you want to sell in a few weeks or 6 months from now. ....

In our market in Prescott, Arizona, we have a wide variety of homes with a broad range of builders, features and settings. The selection of comps (which are often scarce) will have a major effect on what the listing price should be.

I do not recommend factoring in a cushion. Set the listing price right the first time and do not go for the "we can adjust it later" plan.

It depends on the market and culture. In some markets it is expected that sellers have a cushion.

However, it is always better to price at or slightly below target so that buyers compete and the house appraises in the end. It is all about timing and maximizing your return. Usually a fast sale produces the highest net price.

Ed Silva 

It can be such a challenge sometimes to help sellers understand that they strategy THEY think is right will be counter-productive, depending on the market. I liked this post because of the issues it raises that we all run into pretty often

Jeff

Ed -- Sometimes it is SO hard for sellers to wrap their head around pricing the house right, which is as we recommend. They think they are losing money when effectively it will definitely cost them.  The 'let's just see what happens' tactic never pays off.  Good post. We just cannot get this info out there enough.

Seems to me that they believe that everyone wants to offer low and negotiate.

What happens though with a 10% "cushion" is that they won't be in the search results for the realistic price and will lose showings.

We all face this same question over and over.  I tell my clients that if they liked two homes equally in the market and one was priced even $1,000 lower, why would they ever start negotiating on the higher one first?  They usually agree and list at fair market price to start with.