Buyers and Sellers…the axis on which the great wheel of real-estate revolves. At the center of every real-estate job, there are people. You just can’t get around it.
And an agent’s biggest challenge won’t be negotiations, getting listings, or dealing with a dilapidated duplex. Nope. Next to the dreaded unrealistic expectations of clients, those things are a cake-walk.
Pricing Above Market Value
It’s easy to get lost in numbers and statistics when you’re a real-estate agent. You’re so used to watching them fluctuate, and dealing with terms like “marketing-trends,” and “fixed-financing.”
It’s important to remember that your everyday job involves handling people’s biggest investments — not only the investment of their money, but of their emotions, as well.
When your client wants to price his house too high and well out of market range, just remember-your job is to close the gap between that client’s unrealistic expectations and current market trends/local comps without insulting his perception of value.
Talk Numbers from the Start
It’s common for real estate agents to shy away from discussing price too early in their initial meetings with clients, but one way to set the groundwork for a smooth sale process is to be upfront right away.
Since the hardest part of any sale is usually setting the listing price, it just makes sense to get the heavy lifting out of the way.
A smart agent will have done their homework and come equipped with neighborhood comps, and a thorough understanding of current market trends to help direct a seller toward a reasonable number.
When a seller is still determined to set the list price of his home much higher than the current market value, there are a few things that can help an agent bring his or her clients’ expectations back to reality.
If after comps and market have been discussed, a seller is still unwilling to budge on his idea of a “fair price” to list his home, then consider offering him a compromise in the form of setting a date, after which — if there’s been no action on the home — the price is reduced.
Instead of just waiting for your stats to be proven right, you take action in a way that may protect the seller’s pride a bit, as he realizes your advice was spot on. This makes for an easier working relationship in general.
Since it’s already been agreed upon, the reduction is just “part of the plan,” and not an irritating “I told you so.” (even though you’ll totally be thinking, “I told you so!”)
And oftentimes, when your assessment proves accurate, sellers are more inclined to listen to your advice through the remaining process.
It’s Raining Offers…or Not
In a “Seller’s Market,” a seller often expects to receive multiple offers on his home the second it gets listed. He can become irritated if that doesn’t happen and will often look for a scapegoat. And nine times out of 10, that would be you, the listing agent.
If you’ve been able to navigate the price issue successfully, you shouldn’t find yourself in this situation very often, but in real-estate, there really is no definitive way to predict how a certain house will fare on the market.
Just as you discussed price from the beginning, give your client a sense of “control” by laying out a time frame in which he can expect things to happen, and what he can do along the way to help.
If no offers are forthcoming in a specified amount of time, then ask him to upgrade some light fixtures, paint a room, or tweak the furniture layout. When a seller has a task, it helps pass the time, keeping his mind occupied with those little jobs rather than obsessing about the lack of offers.
If dealing diplomatically with a seller’s unrealistic expectations isn’t hard enough for you, consider the other side of the coin:
Unrealistic Buyer Expectations
At this point, we’ve all seen enough DIY home improvement shows to build our own windmill-powered indoor skate-park if we were so inclined. There’s a reason every home-centered network cranks out new shows by the dozens…because people love them. So much so that the ideas and plans of house hunters worldwide are tinted a rosy, diy-ish,“anything goes” kind of color.
Sometimes, buyers have the preconceived idea that they’re going to slip into the housing market like real-estate ninjas and score a sick deal while all the other “not-in-the-know” people are sound asleep.
As an agent, bridging the gap between realistic buyer expectations and HGTV-dreamland can be a serious challenge. Thankfully, there are some things that go a long way toward bringing some reality to the table.
Classic Shock Therapy
It may feel underhanded, but if your buyer insists on a move-in ready home with every amenity under the sun in a prime location — but has the budget of someone who should consider renting the garage of one of those properties instead — take them on a little field trip to visit homes in that location that are in their price-range. Often, young, first-time buyers need a reality check that unless they’re willing to compromise on some things, they’ll most likely be spending several years living in mom & dad’s basement while they save up.
Before and Afters
When you sell a fixer-upper and the folks who bought it do a wonderful job making improvements, ask them if they’ll send you some pictures and general information regarding the cost and skill level those upgrades involved.
Once you’ve shocked some sense into the newbies, take the sting out their disappointment with those before-and-after pictures. Showing the results of some simple home improvement projects that turned out awesome can be really great motivation for buyers with unrealistic expectations, and a wake-up call illustrating what they can afford.
Insulting Offers are…Insulting
Hello, Captain Obvious. But many times, buyers insist on submitting a low-ball price that will undoubtedly be offensive to the seller.
When you encounter the unrealistic expectations of a buyer who believes her offer will be “the one” — since the home has either sat on the market, isn’t in a prime location, doesn’t include some of the amenities that many comps do, or any other unwise assumption bolstering her confidence in the insultingly low offer — give her a little history lesson.
Bring to her attention specific examples of how a low offer can backfire and shut down potential deals, causing the buyer to miss out on her “dream home.” Use those stories to encourage her to come up to a more reasonable number.
Sometimes, just having a printout of recent sales in the area, or current market analysis helps make the point in black and white. Richard Brodkin, CEO of Brodkin Realty Group, says it this way:
“Look to banks, who use factors like appraisals and comps to determine fair market value. That is the market — not what you need, wish, hope for, or want.”
When you encounter unrealistic buyer expectations, many times, just providing facts using the latest statistics relevant to your area will be enough to nudge those expectations back toward the “real world.”
Put your skills to the test
So now that you know how to wrangle sellers and buyers with unrealistic expectations, it’s a great time to schedule your next listing presentation and put those shiny new skills to work.
Figuring out how to showcase your real-estate chops can be a hit-and-miss game, one which most agents agree, takes time and experience to master.
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