Emotions run high regarding selling and buying a home for most people, but for some, emotions get in the way of logic and reason.
For the purpose of this post, I will be discussing seller’s emotions. Many sellers are very emotionally connected to their home. Some have lived there for many years and raised their family there. Most can separate that tie from the reality of the market and the ongoing negotiation throughout the escrow process, but a few cannot. This post is about people who cannot separate their emotional bond and to help you identify if you are one of those people. There are several ways emotions can get in the way.
One way emotions can get in the way is when a seller prices their home. Once you decide to sell your home, it is important to start separating your connection to that home. You should choose a Realtor you can trust and should listen to what they say. If you do not trust the agent, then find another one! This is important because a good agent can help you see the value of the home based on non-emotional statistical facts. Many agents, such as myself, will tell you the truth rather than what you want to hear even at the expense of losing the listing. Find an agent you can trust!
Some people tend to overprice their home because of this emotional bond. I have seen them rationalize the value when it is just not there. There are problems with this. First, even if someone were to offer that price, the home, in most cases, would have to appraise at that price. If the buyer’s bank has it appraised and it comes in lower, it is always upsetting to the seller but even more so if the listing price was based on emotional reasons towards the house. It then becomes personal and any negotiating based on emotions rather than logic often get in the way of a successful sale.
Buyers do not care about your ties to the home. If you are an emotional seller, it helps to look at it through the buyer’s eyes as well. For example, A buyer gives their agent a price range and search criteria. Then, they go look at several homes that meet that criteria. Your home may be in a line of 12 others. It is simple. The buyer is going to buy the home that offers them the most for the least amount of money. A few years ago, buyers would be making offers on homes that were over priced because the market was a lot different. They believed they needed to get into a home before they could not afford it later and loans were being given out that should not have etc… However, we are in a Buyer’s market now and banks have wised up and there are a lot of new lender rules.
In order to sell your home, it is always best to price it as an appraiser would. Use the properties most like yours in your area that have sold in the last 2 to 4 months and make adjustments based on the differences. Only used “SOLDS”. Active listings will give you a good picture on your competition and help you see what has not sold and why, but an appraiser will not use these. If you are emotionally tied to your home, it can be hard to not list your home based on overpriced active listings. This is where an experienced agent can help! Have the agent use their laptop and do a live search with you and comp it together! Just leave emotions out of the picture. You will net more by pricing it where it should be from the start rather than overpricing and thinking you will just take the best offer, especially in this market. It is more likely you will get very few if any showings at all if overpriced.
Once on the MLS, it is on record. If it is overpriced, it will not likely sell until it is priced where it should be. Remember, the number of days on market is recorded. Buyers are more reluctant to want to look at a home that has been on the market a long time because they think something must be wrong with it, so if it is overpriced for a month, they may not even look at it after you drop the price even though it is a fantastic home for the new price! Some buyers have their agent include number of days on the market as one of their search criteria! For example, they may say, “only search back 2 weeks on that first list”. From then on, they get only new listings that come out each day. Those buyers may not see your home’s new price because it is an older listing! So, that is one reason why it is important to price right from the start. You will be missing a huge number of buyers at that time!
If you happen to get into escrow and it is overpriced, it is unlikely that the bank will even loan on it. Either the buyer has to be ABLE and willing to come up with more cash or the seller has to drop the price to appraised value or the buyer and seller need to meet somewhere in between. This kind of thing happens often. If it does, emotions can get in the way. If the seller has a strong emotional tie to the home, they will take it personally and will make negotiating almost impossible at times. I have seen deals fall apart over $500 difference on a $600,000 property all because of emotions. If the seller has a strong emotional bond to the home and the buyer requests reasonable repairs, often the seller takes it personal and will refuse to negotiate and the deal will fall apart, again, sometimes over just a few hundred dollars. When considering a purchase of a few hundred thousand dollars, it just doesn’t make sense to let the deal fall apart when there may be some way to negotiate. But, emotions will let that happen. I have seen it many times.
So, in conclusion, select an agent you can trust and do your best to leave emotions out of the process. Start separating your ties to the home even before you list it. Try to see the bigger picture. Try to see the escrow from the buyer’s point of view as well. It doesn’t mean you should put your tail between your legs and give into everything! Just be sure emotions are not driving your reasons. There are often very good reasons to disagree with a buyer or seller and you should negotiate for what you think is right. Your agent should negotiate for you and get the best possible deal to net you the most for your home. Do not misunderstand, you should not simply just give in! You already know there is give and take, but if you are emotionally tied to a home, it will feel more like you are the only one giving, whether it is involving pricing or negotiating.
Mike McGlade, Broker/Realtor
California Living Real Estate
