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Despite reality, sellers (& buyers) remain emotional on price

Homegain recently conducted a survey of 700+ Realtors® nationwide, the results of which surprised me a bit.  It seems when it’s our home, we feel it’s worth more than the home next door.

Delusions of value

45% of homeowners think their homes should be listed 10 – 20% higher than what their Realtors recommend.  Nearly 20% think that their homes are worth 20% higher than their Realtors’ recommended listing price.  In other words, ~65% disagree with your professional opinion.  Opportunistic homebuyers are experiencing a similar disconnect with only 18% of believing homes are fairly priced.

Emotional appraisal vs. reality

Even with the harsh realities of the current market, decisions about selling or buying real estate remain emotional, despite a recent Zillow® poll that showed that sellers were no longer ‘in denial’ regarding the U.S. housing slide.

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Will the Stimulus stimulate?

The Obama stimulus package was not viewed favorably by a majority of Realtors.  ~60% feel it will have no impact on home prices or may actually cause home prices to fall.  38% think the stimulus package will stabilize home prices and just 3% believe it will help increase prices.

Reality used to be a friend of mine

How do you win listings when the client has convinced themselves their home’s value is higher than your professional recommendation?  Particularly, if they’ve visited a website that has helped validate their misconception – as Ginny Cain discussed last week.   Mark Eckenrode commented on Ginny’s post “it’s important to remove the website from the playing field altogether, or at least re-frame how the client views the website.”  And, to point out while these resources are a good resource for frame of reference, the data may be inaccurate or stale and it lacks the advantage of neighborhood knowledge.

Armed and dangerous

It seems the biggest challenge is getting the homeowner to convince themselves the value is where you say it is.  You have all the data: CMA’s, recent & historical sales, comps, etc.  And, you are prepared to address the inflated prices provided by the web sites mentioned above.  Now what?

Shhhhh

I’ll bet the most critical communication skill for agents is effective listening.  People don’t buy what you wish to sell. They buy what they need.  The same could be said when trying to “sell” the reality of your recommended listing price.  Once you’ve asked what it is about their home that warrants a higher price than the data warrant, listen.  They may just end up explaining it to themselves.

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Written By

Brandie is an unapologetically candid marketing professional who was recently mentioned on BusinessWeek as a Top Young Female Entrepreneur. She recently co-founded consulting firm MarketingTBD. She's held senior level positions with GE and Fidelity, as well as with entrepreneurial start-ups. Raised by a real estate Broker, Brandie is passionate about real estate and is an avid investor. Follow her on Twitter.

7 Comments

7 Comments

  1. Ro Troia

    March 12, 2009 at 5:27 pm

    This is so true, I can’t tell you how many listing appointments I go on where the seller thinks their home is worth so much more than their neighbors. I have lost listings because I don’t agree with their pricing and I try not to over price a listing just to get the listing! That doesn’t do anyone any good. But I’ve seen a seller list their home with an agent that tells them what they want to hear and then the home sits on the market for months.

  2. Marvin Jensen

    March 12, 2009 at 10:57 pm

    Brandie,

    Sellers always have a long list of items about why their home is worth more than the comparables. The problem is their list is usually not relevant for pricing.

    The solution for unrealistic sellers? Walk!

  3. Brandie Young

    March 13, 2009 at 4:43 pm

    Ro & Marvin – sounds like you two have similar thoughts on this … doing what’s best for the customer isn’t necessarily doing what they want. Even if that means (gulp) walking. I have a feeling you may have both learned that the hard way…

    Cheers!

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