Friday, August 6, 2010

"I don't want to give my house away!"

Ever heard that from a seller? It's one of the common objections we hear in today's market. Funny thing is, there's only one way to give your house away. That's to give it to the bank. Otherwise, what the seller is doing is simply pricing the property to sell in today's market.

Yet how do you convince the seller of that and remove the emotion of the decision? Statistics are important. Asking questions is also key. Knowing their motivation and options is another way.

One method I have found to be very helpful is to always approach the seller from a position of contribution rather than desperation. Then present them with the options they have. There are really only 3 or 4 options they can choose. Show them what they are and based on their motivation have them pick one. It doesn't really matter which one they pick, it's their choice. Hopefully with the right statistics and education from the agent they will pick the one that makes the best sense.

So here are the options:

1. Give the house back to the bank.

2. Stay put. If they are solely price motivated, how many years will it take for them to get their price? In my market it's about 7 years before prices will be higher than they are today. That's based on today's stats. So, can they stay for 7 more years? What will it cost for them to stay that long.

3. Price it right and get it sold today. Most of the time, when you calculate what you're asking them to drop the price today and what it will cost to stay and wait it out, the price drop today will be less or the same. So I ask - "Since it seems either way it will cost you _________ amount, the question is do you want to do it slowly or get it over with?" Usually they want to get it over with.

I also remind them if they are re-investing, they will really not lose anything. See, they are simply transferring their investment from one house to another. Eventually the market will appreciate and they will make money. I ask them - "When the market returns and prices go up, do you want to be in this house or the new one?" Guess again which they choose.

Another great point is that it is nearly impossible to under sell a home today. Imagine the following scenario. You have a listing that realistically will sell in today's market for around $250,000. That's fair market value. What would happen if you listed it at $225,000? Would you get multiple offers? Sure. What happens when multiple offers occur? Buyers get so emotionally charged about the property they start bidding higher for it. At the end of the bidding, where will you likely end up? Close to or at the $250,000 price. So you see, buyers won't allow the home to be "given away" in most cases.

Let's also remind ourselves that market value is defined as - What a buyer is willing to pay and a seller is willing to sell for on an open market. I like to add to that definition in today's times - what a lender is willing to lend on it. I'm finding a few cases where the buyer is willing to pay higher than the appraiser thinks it's worth, thus driving the price down again to keep the deal together.

For more objection handlers on pricing, contact me.

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