2010 Apr 26th

Your Negotiating to Sell Your Home – Not Dating!

Don’t Take Everything So Personallyheart

When involved in negotiations over “home sweet home” sellers can get very emotional.  A buyer offers 10% off asking (which is quite reasonable in the Hoboken condo market) and the seller gets all offended.  Or the buyer says “if I can’t get your unit at the price I want I’ll go with the other unit I like”.  The seller responds with  “I just won’t sell it to them if that’s all they think it’s worth or if they like another place better than mine”.  To the sellers, the home is much more than an asset.  It’s all those days lived and memories compiled and has tremendous emotional value.  To the buyer, while they may subjectively like the home and be eager to make it their own, the transaction is to them much more objective and financial.

When a buyer makes an offer in today’s market the seller should take it very seriously.  Even if the seller thinks the offer is way too low, it deserves consideration.  The agents can act as an interface between the emotional (sometime irrational) seller and the buyer but sellers need to keep in mind that the buyers goal is to secure the property for the lowest possible price.  It’s a dance, it’s posturing, it’s negotiating. There is no reason for a seller to take it personally and be insulted by the buyer’s moves.  It’s not dating –  it’s all about the money.

  1. Craig

    Though you are seeing it less and less, the irrational seller is the reason why some asking prices and counteroffers are still out of whack with reality. Lori posits that this is based on emotion, but I say it’s more likely based on greed or economic necessity for those who are underwater. You know what the rational and realistic sellers who won’t sell for less than top dollar are doing? Renting out their property instead and waiting out the market.

    What every listing agent should be doing is showing sellers the comps and advising them of two things from day 1: one, that no buyer cares about what they think their home is worth; two, this is because the seller doesn’t really get to determine the final sale price – what the market will bear does. I’m not sure that always happens because it’s probably not the best way to get new listings.

  2. HobokenSeller

    Just got an offer on our condo that was 15% below our asking price, which we’ve reduced twice since listing in February.

    I wasn’t offended by the offer because I thought it was an insult to my taste, or anything preposterous like that, but I was “emotional” since I was concerned about my mortgage being $30k underwater!

  3. carl

    what is address of ur condo

  4. cranky

    The notion that sellers are the only irrational parties out there is an example of the cyclic boom/bust psychology that makes real estate either a windfall or a disaster for honest families who simply want to own in order to have a better quality property and the freedom to manage and improve their own property, but have job changes or life events that require shorter term ownership. For every seller who is not pricing to comps and focused on getting “their number,” which the market may not bear, there is also a buyer who is lowballing and looking for “a bargain.” What happens in a declining market is that everyone tells the seller to panic and take whatever they can get since they’ll get less in a month, ignoring comps, and magically the market bears that lowball price. And all those deals then add up to further declining home prices for the next month. Any time the conversation is one sided– i.e. buyers are rational and objective and sellers are irrational and emotional, that conversation is pushing the market too far in one direction. All deals have two sides.
    Also- before you cry greed, think about the many families that are just trying to get what the current comps are saying rather than whatever arbitrary number a lowballer has in mind, and how that might be to protect that family’s savings for college or a future house. Greed is a better word for the word for loan officers, banks and investors who profited on both side of the volatility.

  5. carl

    and flippers

  6. homeboken

    Cranky you said:

    “Also- before you cry greed, think about the many families that are just trying to get what the current comps are saying rather than whatever arbitrary number a lowballer has in mind”

    If the Seller’s aren’t happy with the price, they say no. And they wait for the buyer to offer what they think is fair. Nobody is forcing any hands (unless the property is short and a bank is invovled). Whether the seller’s are greedy or the buyer is low-balling, doesn’t matter. The house sells at the market price.

  7. cranky

    that’s exactly my point… the original post suggest turning down any offer whatsoever is being emotional or irrational… the underlying suggestion is take what you can get no matter how it compares to comps… i.e. “Even if the seller thinks the offer is way too low, it deserves consideration.” The implication here is that sellers are never rationally looking at comps, only buyers, and that’s not always the case. The quote you pull from my reply doesn’t state that anyone’s forcing hands, what it states is that sometimes a seller with a reasonable price range in mind may be digging in their heals for legitimate reasons beyond greed. Read it again. Just pointing out that greed is not always the motivation for a seller being firm in a negotiation during this market.

  8. Craig

    @Cranky – No one has any issue with the many families trying to get what the current comps say is the market value of their property – those are the rational sellers. The thread is about the clowns that are offended when someone offers 10% under the asking price despite that being known to be a typical reasonable first offer. That’s not low-balling. That’s starting the negotiating process. Few buyers start off with their best offer and in this market many are lucky to even get any offers. This is why Lori said when a buyer makes an offer in today’s market the seller should take it very seriously. She’s right. No one is suggesting a seller should take any offer they get. But all offers in this market should be seriously considered. It’s not 2006 anymore.

  9. homeboken

    Craig is exactly right. The worst choice a seller can make is to act offended and not counter.

    To take Lori’s dating example, when there is 20 nerdy guys waiting for a dance, you don’t see them getting picky when the comly girl approaches. Trust me, I was a nerd, you take what you can get. Once the other girls see you dancing (ie their are some offers on your property) you can start to ask the prettier girls out.

    Waiting for the homecoming queen will gurantee you spend the night alone.

  10. Lori

    Ha ha ha. That’s great.

  11. whynot

    I beleive that Cranky is saying that there are a lot of Buyers going around just making low ball offers and that those offers should be and usually are simply ignored. The Buyer is being totally irrational. If a property is priced correctly, 10% off is one thing, but 20% off is something else. No?

  12. homeboken

    If a property is priced correctly, the it will sell. It won’t be on the market long enough to solicit a bunch of low-ball offers.

    If a seller prices at what they think is fair, based on tons of research, then they get 15 low-balls in a row over the course of 90 days, guess what….

  13. whynot

    homeboken – i think you’re a little off base. in todays market, with not a lot of buyers, if something is priced right, it may still have to wait months to sell. during that time, i’m sure there’s enough low ballers out there to meet your example, but i could be wrong. fmv is not defined as what immediately sells.

  14. Craig

    @why not – fair market value is defined as what buyers are willing to pay. So if a property has been sitting for 120 days with not one offer close to list and all the seller has gotten are 15 offers the seller considers low-ball, guess what? The market has spoken and those offers are now FMV regardless of what the comps said at the time of listing. Comps are a good guide to price property at the time of listing, but their relevancy can quickly be moot in a fast-changing marketplace. That’s why any comps more than 3-6 months old are considered stale.

    That’s not to say a seller is forced to sell at whatever they are offered. If they don’t like the offers they get, their remedy is to remove the property from the market and keep it, or rent it out until the market allows them to fetch the price they want.

  15. carl

    look at the inventory the buyers have spoken

  16. whynot

    Guys – in our search, there have been a number of properties that sat for a while, didn’t take any of the low ball offers that first popped up and sold very little off listing. in my opinion, the low ball offers were obviously not fmv. if you said, it sat for 9 months with no offers at all close to list, you would have a point. but, in todays market, sellers have to wait sometimes.

  17. whynot

    Craig – I just realized that you defined fmv incorrectly, as “what buyers are willing to pay”.

    Unfortunately for me, as a Buyer, it is more like:

    “Fair market value (FMV) is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the real estate market.”

    Did you forget the Seller on purpose?

    Homeboken can laugh at things, but it does take two to tango. Buyers (like Sellers) are just not realistic.

  18. Rob

    In regards to sellers acting emotionally…

    My wife and I made an offer on a 2 bedroom condo recently and offerred 5% below asking. The sellers were not happy so we eventually offerred 3% below asking and we wanted them to pay closing costs. I am not sure if it was the listing agent or the sellers who felt this way, but they were shocked we would do such a thing. They immediately did not want to do business with us and thought we were playing games with them. I think this is another example of sellers being attached and not thinking rationally, but who knows. I could be the crazy one in this situation.

  19. bz

    Rob, I think that seller might be afraid that the closing cost can easily reach $10,000 which might be already 2% of the price. So in that case, you really didn’t improve your offer from a seller’s perspective. The realtors that involved in this deal should be happier as the commission will be higher.

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