Bernice Ross

With all the uncertainty tied to the war on Iran, the resulting pause in lowering interest rates and weakening real estate prices in many markets, the one thing that hasn’t changed is that sellers want the highest possible sales price from their real estate sale.

But pinpointing the best possible price for a seller’s home can be a challenge, especially if prices are dropping and sales have slowed down. If you allow your sellers to overprice your property in today’s market, it can stay on the market for months. And if values in your area are declining, the longer it takes to sell, the less money the seller will net.

In short, overpricing a listing is the kiss of death in today’s market.

How prepared are to meet these common seller objections that will leave their listing languishing on the market if you fail?

The Market Sets the Price

Wanting a list price based on the list prices of other properties is a familiar mistake. Sellers look at what other properties are listed for in their neighborhood and base their price on those numbers. To correctly price their property, they must rely on closed sales, not what they see other properties priced at. The only sales that matter are those that closed.

Others base their desired list price on what they paid in the first place, believing that they have to achieve a certain increase over that to “break even,” for example. This reasoning is based upon a very common fallacy. Many people believe that the agents and the sellers determine the price at which a property will sell.

The truth of the matter is that the real estate market is like the stock market. The buyers – not the sellers or agents – determine whether a property is saleable in any given market. For example, if the seller paid $80 a share for IBM stock and today it’s selling for $50 a share, if they wanted to sell for $80 per share, they wouldn’t be a seller in today’s market.

Another one you’ve probably run into before: a seller overestimating the value of renovations they’ve made. The truth is while some improvements do increase value, like adding square footage or bringing their property up to the same standards as most other properties in the area. Most improvements, however, only make their home more saleable.

For example, dark green granite countertops with dark walnut flooring may make a home more attractive to potential buyers, but normally don’t add much to a sales price because they have no value to a buyer who prefers white quartz and plush carpets.

Also, if they over-improve their property by making your home substantially larger than that of your neighbors, they probably won’t recoup that money either.

But Zillow Says…!

Another class of mistakes covers timing.

Sellers often want to “test” the market for a few weeks to see if they can get a higher price. This is a huge mistake. Real estate professionals know that all listings have a honeymoon period where the listing will have the most showings. This normally takes place during the first 21 days the property is on the market.

If the seller doesn’t sell during the honeymoon period, there’s a high probability their home will be on the market for an extended period. You can generate additional interest with a price reduction, but it never creates the attention you receive when you first list the property.

Lastly, let’s talk about the many online price-estimating tools sellers get exposed to all the time.

No matter who is using a computer algorithm to price property, there are certain inherent problems with automated valuation models (AVMs) like Zillow. The biggest issue is that the algorithm has no real way to take the condition or the interior of the property into consideration.

Instead, automated valuation models are based on mathematical assumptions and are not able to consider special factors that may make the seller’s home valuable – and they don’t always agree.

Compare Zillow to other AVM alternatives like Realtor.com. The secret is to ask, which one is correct? You can then point out that the best way to price a property is with a Realtor (like you) who knows the market and has the latest data available.

When sellers understand how buyers actually determine what they think a house is worth to them, many of these objections disappear. Your job is not to debate price with the seller, but to help them position their home where buyers see it as the best value among the properties currently on the market.

Bernice Ross is a nationally syndicated columnist, author, trainer and speaker on real estate topics. She can be reached at bernice@realestatecoach.com.