How Motivated is the Seller Really?

“When the student is ready, the teacher will appear.”

—-Zen saying

“When a listed home is priced right ” and well-prepped, photographed, marketed, etc. ” the Buyer will appear.”

-—Ross Kaplan

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.”
Unh-uh.

In my experience, such a tack seldom works, for three reasons:

One. “Minnesota Nice.” If a home that’s listed for $375k is worth closer to $325k, Buyers ” at least in Minnesota ” are hesitant to offer, say, $315k or $320k.

Their fear?

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.“)

Buyer Trap

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.

The caption?

“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.

See also, “Perils of Overpricing Even (Especially) in a Rising Market“; “The Fallacy of “Leaving Room to Negotiate’ (aka Overpricing)”; “Rose-colored Glasses . . . or Magnifying Lens?“; and “Listing Agent Come-on:  “Seller Will Look at All Offers.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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