How to Handle Unrealistic Asking Prices in Real Estate Transactions
Brokerage Tips
How to Handle Unrealistic Asking Prices in Real Estate Transactions
Navigating the tricky waters of real estate pricing can be a daunting task, especially when sellers hold unrealistic expectations. With insights from a Real Estate Broker and a Sales Associate- REALTOR, this article sheds light on effective strategies to manage such situations. The first expert suggests providing a Comparative Market Analysis, while the final insight emphasizes approaching the matter with empathy and data. Discover these and five other key approaches shared by industry professionals.
- Provide Comparative Market Analysis
- Ask How Seller Determined Price
- Use Data to Advocate Proper Pricing
- Consult an Expert for Market Data
- Approach with Empathy and Data
Provide Comparative Market Analysis
When sellers want to list at an unrealistic list price, I start with a comparative approach. I provide examples of recently sold comparable homes and nearby homes sold at the list price they want to start at. I then discuss with them that their home is not like those that have sold at the unrealistic price. Next, I share a study I have produced illustrating that home sellers who price their home right sooner rather than later get a better final result. This has been very effective in instances where the seller must sell, such as an inherited home, relocation, or a divorce. Lastly, I walk away and tell the seller I'm not interested in working for them. I am a low-commission real estate agent, and weeks of bad phone calls between me and the client about why their home isn't performing in the market is something I just do not have the time for. I've had numerous sellers respond by deciding to hire me and listing their home at a marketable price.
Ask How Seller Determined Price
Good afternoon, Emily,
Thank you for reaching out to me.
To handle situations where the asking price is too high and unrealistic compared to market value is a delicate conversation.
The key is to have the seller come to the conclusion themselves rather than attempting to change their mind outright. It starts with a simple question spoken with genuine curiosity: "How did you arrive at that sales price?"
Next, is to pull up the comparable properties—the comps—and go through each one together with the seller: What is better or worse, updated vs. outdated, more desirable vs. less. From this exercise, you will be able to "beat out the competition" by pricing more aligned to the market.
I hope that helps!
If you use my quote, please link to my site:
https://www.besttexashousebuyers.com/
V/r,
Mark
Use Data to Advocate Proper Pricing
In the current real-estate landscape, an effective pricing strategy can be the crucial factor that determines whether a property sells quickly or remains on the market for an extended period. When working with a seller who has set an unrealistic asking price for their home, it is essential to equip them with a thorough and well-researched Comparative Market Analysis (CMA). This detailed assessment not only highlights recent sales of similar properties but also provides valuable insights into current market trends and conditions. By presenting this information, you can better advocate for a more appropriate price point, helping your client understand the rationale behind your recommendations.
Demonstrating the realities of the market can significantly enhance your credibility and reassure your client about the pricing strategy you propose. When sellers see concrete data—such as average days on the market for similar homes, pricing trends, and buyer demand—they are more likely to appreciate the necessity of adjusting their expectations.
Additionally, another effective approach to managing expectations is to arrange for a formal appraisal of the home. An appraisal conducted by a qualified professional offers an unbiased assessment of the property's value based on various factors, including location, condition, and recent sales of comparable homes. This independent evaluation provides further validation of the market's stance and can help persuade sellers to reconsider their asking price.
Incorporating both a CMA and a formal appraisal into your strategy not only empowers you as a real-estate agent but also supports your clients in making informed decisions about their property. Ultimately, a realistic and data-driven pricing approach fosters trust and collaboration between you and the seller, increasing the likelihood of a successful sale. By prioritizing accurate pricing and transparent communication, you can navigate the complexities of the real-estate market more effectively, ensuring that your listings attract potential buyers rather than languishing unsold.
Consult an Expert for Market Data
The best way to mitigate a situation in which an asking price is unreasonable is to make sure you've done your due diligence and know what true market value is ahead of any discussions. Many a deal is not made due to unrealistic expectations on either side. Truly, the best way to accomplish this is to consult an expert. Reach out to a local appraiser and get the market data that show the market ranges. In presenting your data, if a seller can see for themselves and come to the conclusion themselves, they're more apt to revise expectations. Once the seller can see what the true market value is, don't low-ball them. Being fair builds trust. Trust leads to deals and better business relationships.
Approach with Empathy and Data
When a seller's asking price is unrealistic, the first step is always to approach the conversation with empathy and data. I try to understand their perspective—why they believe the property is worth that amount. Sometimes it's an emotional attachment or outdated market expectations, especially in a market like Arizona, where property values can fluctuate depending on the area's growth trends.
To manage expectations, I come prepared with a detailed analysis. I'll share comparable sales data, occupancy rates, and revenue potential for similar properties in the area. For example, when negotiating for a storage facility in a high-growth Arizona suburb, the seller was adamant about a premium price because of the area's development potential. However, our analysis showed that the facility had below-average occupancy and outdated amenities, which would require significant investment to bring up to market standards. Presenting this data in a straightforward, nonconfrontational way helped frame the discussion around facts rather than opinions.
I also highlight the risks of overpricing, such as a longer time on the market or missed opportunities with qualified buyers. If necessary, I'll explain how our offer reflects not just the current market value but also the investment required to unlock the property's potential. Most sellers appreciate this transparent approach, and while they might not always agree immediately, it often opens the door for a more productive negotiation.
