Setting Expectations

In the last few years maybe the biggest casualty for sellers in this area has been to their expectations of what their home is worth. Many sellers still labor under the illusion that it’s 2005 and if and when they sell their home they’ll get what they want for it. It often seems that, no matter what issues a home presents, many sellers steadfastly regard their homes as better than the competition…past or present.

All of us have blind spots…it’s not all that surprising that folks would lack objectivity when it comes to their own home. That’s why an experienced real estate agent is particularly handy. One of the most important things that experienced real estate agent can do is to set appropriate expectations. It’s sort of important that that happens actually.

Last week I had an interesting experience. I wrote an offer on a small 2 bedroom house that had been on the market for 17 days and had yet to receive an offer. My clients were absolutely crazy about it and when we went to write an offer these folks didn’t want to take any chances of losing it…so we came in at full price, close in 30 days, 20% down, AS IS. All the bells and whistles, basically. Meanwhile, the seller had expectations that they were certainly going to get multiple offers (since their house was obviously the best 2 bedroom house in town!) and, in their minds, the asking price was simply a starting point…bait with which to create a feeding frenzy that would propel them into a higher price range.

Like quite a few sellers, these folks just couldn’t get over the expectation that their home was worth SO much more than their asking price. In response to their disappointment…they countered us $20,000 over their asking price. After I climbed down from the ceiling I reminded the listing agent that 1) this is the 2010 market…not 2005, 2) there isn’t any other offers on the table with which the seller get’s to leverage an overbid against, 3) my clients have a spotless, full price offer (that could potentially become a less than full price offer if someone wasn’t careful) and 4) if they hadn’t gotten multiple offers by this point…it probably wasn’t going to happen and their chances of an overbid had become as unlikely as my chances of becoming the 49ers starting quarterback this season.

At any rate, we politely countered the sellers counter offer with one of our own. One that looked awfully similar to our original offer. This time, we got it. Fortunately.

It’s really not hard to understand how tied to our own unique perspective we get when it comes to our home. It’s clearly important, though, to objectively establish expectations that are realistic, that include an honest examination of what “plan B” looks like just in case the greater Bay Area doesn’t inundate us with multiple offers. It’s also pretty risky right now to create a “bait” asking price! I can’t imagine any buyer in their right mind who would willingly agree to a counter offer that’s over the sellers asking price when there is no other offers on the table. The simple truth of the matter is buyers don’t really care what the seller wants or needs when it come to the price of the house…they care what they want or need in that process.

Comments

  1. Michelle says:

    Congrats on your clients!

  2. Jim Minkey says:

    Thanks Michelle. When you say “congrats on your clients” do you mean because I have any at all?

  3. Timely post. At a time when some markets are experiencing increased activity, sellers might have the impression that it’s slowly becoming a seller’s market. It is NOT! With staggering numbers of foreclosure filings which will eventually turn into REO’s hitting the market (at least a portion thereof), long-term appreciation is not likely to be in the near future. Sellers need to price at the bottom of their property’s range and be in good condition in order to get the kind of traffic that will get their home sold. Good post, Jim.

  4. Jason Kwan says:

    Great post Jim, we just sold our home in Foster City and followed the advice of our real estate agent who pointed out what a clean offer we had on the table. After a short negotiation, we reached an agreement with the buyer and close at the end of the week. Thanks for a great blog!

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