Jacqueline Kyo Thomas
Are you dealing with an unrealistic seller? Here are a few telltale signs:
- The seller has turned down other agents because of their low valuations
- They're relying on anecdotal evidence from family, friends, and co-workers instead of your professionally-acquired data
- Your seller client insists on an asking price far above the comps
- Other, comparable homes in the neighborhood are actually selling
If one or more of the above apply, you're likely dealing with a difficult homeowner. That’s the bad news. But here’s the good news: Even the most unrealistic seller can see the light. In this post, we’ll discuss how to work with unreasonable homesellers.
Be Empathetic
Selling a house is an emotional experience. It can be difficult to part with a home because there are memories attached to every room. These memories make the home more valuable to its owner, which can drive up the asking price.
Logically, your homeowner knows that personal value is not the same as the home’s actual market value. However, most homeowners (and homebuyers, for that matter) inadvertently use emotion rather than logic to steer them through the process. This is one of the many reasons why they need your professional, logical, and objective help. You can be their rational guide.
But being rational doesn’t mean that you should check your empathy at the door. Be conscious of the fact that, when selling one’s home, it’s difficult to be unbiased and recognize the home’s true market value. Acknowledge your client’s emotions and give them a chance to talk about it. Perhaps they’re selling due to divorce or the death of a loved one. They may need to process through these emotions before they can embrace your pricing strategy.
Yup, you’ve got to emotionally support your clients, too.
Come With the Facts
Although selling is usually emotional, not every client is sentimental. Some clients will have solid (to them) reasons why their home should be listed at a specific price. For these clients, in particular, explain how you’ve arrived at your valuation with undeniable facts. Provide them with an in-depth report (a.k.a. Comparative Market Analysis, or CMA for short).
Your CMA will be your most persuasive tool. It should easily explain how you’ve arrived on your property valuation. When confronted with all of the data points in your CMA, your unrealistic client should come around.
Unless they’re stubborn. If that’s the case, continue to the next option.
Educate Them on the Dangers of Overpricing a Home
Overpricing isn’t just a simple pricing strategy or harmless negotiation tactic, and your client needs to know this. Overpricing can be dangerous.
Clearly explain to your client that inflated pricing is the number one reason why homes fail to sell. Not only will a buyer hesitate to tour an overpriced home, they may not even see the listing at all. That’s because buyers can search for homes by price.
Buyer’s agents will also steer their clients away from an overpriced property. No one wants to start a negotiation with an unreasonable seller.
Add Price Reductions to the Listing Agreement
If you can’t get the seller to budge on pricing, here’s another option: Include price reductions into your listing agreement. Appease the seller by going with their price initially, but insist on swift and aggressive price reductions if the home doesn’t sell within a specific time frame.
Many agents go by the 10-day rule. If the home doesn’t get offers or interest within the first 10 days, cut the asking price.
Make sure your seller client understands the wisdom behind immediate price reductions. The best chance of selling a home at asking price is within the first 30 days that it’s on the market. This is why it’s important to schedule price reductions early on.
Encourage Them to Get an Appraisal
If you cannot get your client to agree to a price or on adding price reductions to your listing agreement, ask them to get a professional second opinion— not from another real estate agent, but from an actual appraiser. That’s right. Home appraisals aren't just for mortgage lenders and homebuyers. It's also a tool for the frustrated real estate agent who needs to convince an unrealistic seller client that their home is overpriced.
An appraiser will consider various factors when arriving at the property's market value, including location, square footage, amenities, and comparable sales in the neighborhood— all of the same things that you've likely done in your CMA. Their appraisal should agree with yours.
Because the home appraisal is conducted by an impartial, state-licensed professional, your client (if reasonable) has no choice but to accept the appraiser's unbiased opinion.
Not sure how to convince your unrealistic seller client to get an appraisal?
Gently remind them that it's best to follow your professional pricing opinion because if they do actually sell their (overpriced) home, it will still get appraised. And if the appraiser considers the home's value to be less than its purchase price, the lender could deny the loan and force the buyer to cancel the transaction.
Scare them with the worst case scenario so that they know what could happen if they don’t follow your advice.
Be Willing to Walk Away
If a client doesn’t want to listen to your sound advice, walking away may be the right option. It’s important to have the trust of your client. If your client doesn’t trust you, they are likely to question your strategy throughout the selling process.
You don’t have to deal with that. Many agents refuse to work with unrealistic home sellers, and you can say “sayonara” too.
But don’t lose their number. You’ll see them again. While they may go on to another listing agent, they probably won’t sell their overpriced home with them, either. Then, after that agreement has expired, you can offer your services again (if you’re so inclined), and hopefully, they’re more deferential.
Ask for a Retainer
But wait a minute. Maybe you shouldn’t leave just yet.
There are times when it makes sense to stick with a home seller, even an unrealistic one. This is especially true if you’re new to real estate and still building your client list. You may not have the luxury to walk away from a potential payday. So, what do you do in this case?
Ask them to pay you a retainer fee.
Just like a lawyer, you, too, can charge an upfront fee from your real estate clients. If your client demands that you list at an inflated price, don’t say “no.” Do it, but be upfront with them about your hesitation. Then get a retainer to help you cover the marketing costs (for flyers, the photographer, etc.). If the home does sell, you can then deduct the retainer fee from your commission.
Asking for a retainer forces your client to carefully consider their pricing stance. It also covers you in case the home doesn’t sell so that you don’t lose all of the money that you put into marketing. But always remember that you, as a real estate agent, have a fiduciary responsibility to give your clients good and reliable advice, even when your client doesn’t want to listen to it. Ask for the retainer but state your reservations for listing at the disagreed price.
Final Thoughts
Working with an unrealistic seller can be a nightmare. However, you can get them to trust your professional opinion by implementing the above strategies.
Before you go, check out these additional resources: