How Motivated is the Seller Really?
“When the student is ready, the teacher will appear.”
“When a listed home is priced right — and well-prepped, photographed, marketed, etc. — the Buyer will appear.”
One of the most common lines listing agents (representing Sellers) hear from their clients — particularly when their home isn’t attracting strong interest from Buyers — goes something like this:
“I don’t want to drop my asking price, because that will hurt my negotiating leverage. Instead, just tell anyone who’s interested in my home to make an offer, and we’ll negotiate.”
In my experience, such a tack seldom works, for three reasons:
One. “Minnesota Nice.” If a home that’s listed for $275k is worth closer to $225k, Buyers — at least in Minnesota — are hesitant to offer, say, $215k or $220k.
They’ll offend the Seller.
Even when an offer isn’t a lowball, if the Seller regards it as such, it’s likely to antagonize them and make a future deal more problematic.
At least with that Buyer.
(Often times, a disappointingly low offer sets up a deal with another Buyer. See, “What Lowball Offers Really Accomplish.“)
Reason #2 has to do with what I’ll call “faux Seller motivation.”
Just because a listing is larded with come-on’s like “all serious offers considered,” “must sell,” etc., doesn’t mean that the Seller is truly motivated.
My favorite New Yorker cartoon shows a father and son in front of a store front window plastered with signs blaring, “Must Liquidate!” “90% Off!” “Going Out of Business!, ” etc., etc.
“Some day, son, this will all be yours.”
Buyers who take the bait and engage with an unmotivated Seller soon discover it’s a frustrating waste of time and energy.
Or worse (see next).
Strategic Considerations; “Shopping an Offer”
The third reason Buyers don’t write offers on overpriced homes is more tactical.
When an otherwise perfectly saleable home sits on the market at a too-high price, interested Buyers will frequently wait and watch for a price reduction.
So will their agents.
A good listing agent keeps track of such interest, and — if a written offer comes in, however low — will try to use it to flush out other offers.
Buyers who don’t want their offer shopped or otherwise used against them . . . don’t make written offers.
That’s true even though the Buyer has the right to withdraw their unaccepted offer at any time (note to Sellers: they do).
List Price as Market Signal
So, when it comes to would-be Sellers setting an asking price (or reducing it, if that becomes necessary), what’s the takeaway?
When a home’s list price is in the ballpark — and the home is otherwise well-prepped, staged, marketed, etc. — one can reasonably infer that the Seller is motivated.
When their asking price is unrealistically high . . they’re not.
P.S.: Of course, the other issue with setting a too-high list price, at least in a housing market with decent inventory: Buyers will compare the overpriced home to more impressive homes in the same price range, and find it wanting.
Then, one of two things will happen (or should I say, won’t happen): 1) the home won’t get shown; or 2) if it is shown, there won’t be any follow-up interest.