Amid all the uncertainty surrounding the Iran war, the resulting moratorium on interest rate cuts, and the decline in real estate prices in many markets, the one thing that hasn’t changed is that sellers want the highest possible sale price for their property.
How prepared are you to deal with these six common seller objections that can cause your listing to languish in the market?
In today’s market, an overpriced listing is the kiss of death.
It can be difficult to pinpoint the highest price for a seller’s home, especially if prices are falling and sales are slow. If you allow a seller to overprice your property in today’s market, the property can remain on the market for months.
If values in your area are declining, the longer it takes to sell, the less profit the seller will make. Here are some common ways sellers sabotage a sale and how you can help them properly price their property.
1. “Yes, but the house down the street…”
This is one of the most common mistakes sellers make. They look at what other properties are listed in the neighborhood and base their prices on those numbers. To correctly price a property, you must rely on completed sales, not the prices of other properties. The only sales that matter are those that close.
2. “Yes, but I paid…”
Many sellers believe that the amount they paid for a property will affect its current selling price. “We paid $300,000 for this property three years ago. To break even, we must sell it for at least $318,000.” This reasoning is based on a very common fallacy. Many people believe that the real estate sale price is determined by the agent and the seller.
The truth is that the real estate market is similar to the stock market. It is up to the buyer, not the seller or agent, to determine whether a property can be sold in a particular market. For example, suppose a seller paid $80 per share for IBM stock, but today it sells for $50 per share. Even if they wanted to sell for $80 per share, they would not be sellers in today’s market.
The same applies to the seller’s real estate. The price they paid has nothing to do with what the buyer pays.
3. “But what about my improvements and upgrades?”
Many sellers have difficulty understanding how improvements and upgrades they make to a property will affect value. Some improvements add value. Generally, this involves adding square footage or bringing the property up to the same standard as most other properties in the area.
However, while most improvements make a home more sellable, they do not necessarily increase its value.
For example, let’s say the seller has dark green granite countertops throughout the home and dark walnut floors. These features can make the home more attractive to potential buyers, but they usually don’t add much to the sales price. That’s because these improvements are of no value to buyers who prefer white quartz or plush carpeting.
Also, if you over-improve your property, such as making your home significantly larger than your neighbor’s, you probably won’t get your money back either.
4. “I want to test the market.”
Sellers often want to “test” the market. “Let’s list it at a higher price for a few weeks and see what happens.” This is a big mistake.
Real estate experts know that every property has a “honeymoon period” when it sees the most listings. This typically occurs during the first 21 days after the property is on the market.
Buyers who haven’t found a property yet want to view new properties as soon as they come on the market. This initial rush usually wears off after the first three weeks. After that, showings are usually limited to new buyers entering the market.
If a seller fails to sell during the honeymoon period, the home is likely to remain on the market for a long time. Lowering your price may generate additional interest, but it will never generate the kind of attention you receive when you first list your property.
5. “Let’s wait for the spring market (until the war ends and interest rates fall…)”
Real estate activity increases at certain times of the year, but waiting for a certain season is no guarantee that prices will be higher. Also, no one knows how long the war will last or even if interest rates will fall.
A powerful question, especially if a seller has to sell, is to ask, “What will be the quality of the replacement if I don’t sell now?” This question forces them to consider what would happen if they had to stay where they currently live. For some, that may not be a problem, but if you have to sell now, you have to deal with the realities of today’s market.
6. “But Zillow says my home is worth more!”
Regardless of who uses computer algorithms to price real estate, there are some inherent problems with automated valuation models (AVMs) such as Zillow. The first problem is that the algorithm has no real way to take into account the condition or interior of the property.
Instead, automated valuation models are based on mathematical assumptions and cannot account for special factors that can increase the value of a seller’s home. do they live in lakes? Did they renovate the kitchen? AVM should be used as a starting point, not the final word on what the price should be.
Examples of other AVM alternatives include Realtor.com, E-PropertyWatch, or HomeSnap. The trick is to ask, “Which one is correct?” You can then point out that the best way to price a property is to consult a real estate agent (like yourself) who knows the market and has the latest data available on the CMA.
Many of these objections disappear when sellers understand how buyers actually determine the value of a home to them. Your job is not to argue with the seller about price, but rather to help the seller locate their home in what they believe is the best value of the properties currently on the market.
Bernice Ross is President and CEO of BrokerageUP and RealEstateCoach.com, founder of Profit.RealEstate, and a national speaker, author, and trainer with over 1,500 published articles.
