I was in the office the other day when I overheard a colleague say something profound. He was on the phone with someone else when he said "Our job is not so much about Real Estate as it is about managing expectations." The moment he said it, it made perfect sense. 80% of my job is managing expectations. As a REALTOR, I really don't have the real decision making ability in the transactions I perform. I am there to inform, protect, and set up proper expectations.
For example, one of the trends that I have been noticing as of late with first time homebuyers is the need to get the extreme "deal". Most buyers, today, realize that the market has been heading south now for awhile, and want to be able to snag that deal of a lifetime where a property is listed at 50% of market. While there is nothing wrong with wanting a deal like that, the likelyhood of a deal like that is very slim. Professional investors, with years of experience have a hard time getting 80% of market value with all cash offers, so how can a first time homebuyer, needing seller assistance expect to get that deal? This isn't so much the buyer's fault as it is the agent's responsibility to sit the buyer down and explain to them the realities of the market. Just because there is a lot of inventory doesn't mean every seller is an idiot. I've written a ton of terrible offers with one set of clients in particular, that were always 50k, 60k, 70k+ under list price. They seemed more interested in getting a steal than in the home itself. Everytime we got rejected we would see the property sell for more than our offer. Sometimes it would happen immediately, and sometimes it would still be active for weeks before it would get sold. Regardless, the rejected offers caused aggravation for my buyers (as well as myself). They probably viewed it to be my failure as an agent to not be able to get them a deal. If I had taken the proper steps ahead of time, and had a "heart to heart" chat with them about the realities of their offers, I might have had more luck. As it turns out, they ended up buying property driving by a new build without me, on a property that didn't at all match the specs we had been looking for the whole time. Last I checked, they were still battling with the sales office to reduce the price on that new build. That mistake cost me hours of wasted time and thousands of dollars in lost commissions.
On the other side, it's extremely important in this market that a seller knows the realistic market value of his or her home and lists their home at the proper price. In this market, it does no one any good to price high, and "negotiate down" from there. That philosophy will lead you to be rethinking your strategy months later when it hasn't sold. A great game I play with my sellers is role play. I put them in the shoes of the buyer and ask them "if you were a buyer, looking at these comps, what would you pay for this house?" They always struggle with the question, and want you to give them the answer. It is very important that you make them look at the comps, and say for themselves. If after a long conversation they are stuck in their ways, then it's up to you, as an agent, as to whether or not they are worth your time. Otherwise, you are going to be stuck with a listing that won't sell, and a seller that won't be happy with you. Managing these expectations is very hard. It's hard to tell an excited and motivated new client to come back down to Earth. Sometimes, you feel like you are killing their dreams. However, you must view it as your job and responsibility to do it. In most cases, this will lead to saving money, reducing aggravation, and saving one of the most valuable things of all....time. Not doing, on the otherhand, would be a disservice to them, usually ends up in worse deals for the client, and always ends up a waste of time to you.
Thanks for listening,
Arcadia, Phoenix, Tempe, and Scottsdale Real Estate Expert