In the current housing market, sellers are trying to make up for lost ground from the housing bubble burst, and buyers are trying to snatch up properties for rock-bottom prices. Both are understandable positions to take.
But how do you get the former to list their homes at competitive prices and the latter to make realistic offers? Here are a few thoughts from Rodeo Realty agents.
Ron Tanzman of Rodeo Realty’s Calabasas office said it’s important to suss out the educated versus unrealistic buyers and sellers.
For the “unrealistic” ones, find out how they came up with their numbers. Are they basing those numbers on pure emotion, desire to make up for lost ground in the economy or what?
Tanzman said in most cases he can get buyers to list at a competitive price by simply showing them comparables in the area. If not, he pulls the “Sale or sit close” – e.g. If it’s priced at X amount you can plan on selling. If it’s priced at Y you can plan on sitting on the home.
Homes in the under $500,000 segment are netting multiple offers when priced right, he said. Those in the $700,000+ are moving when priced competitively. Otherwise, they may sit for five or six months and go through multiple price reductions.
For buyers, “winning” is often more of the objective than price alone. So Tanzman points out multiple ways they can win right now. Historically low mortgage rates and the benefits of home ownership are a couple examples. If they’re still not willing to budge from an unreasonable offer, and that offer isn’t gaining traction with the seller, it might be time to show them another property.
Denise Nelan of Rodeo’s Studio City office said one of the hardest factors to contend with is buyers and sellers thinking they know about real estate. Unfortunately, many get their information from friends or web sites that are out of touch with specific market realities.
She stresses comparable sales in the area. When dealing with a buyer who’s asking for everything under the sun during the negotiation, she also may ask them to put themselves in the shoes of the seller.
Nelan recalls one multiple offer scenario where a buyer asked the seller to “pay for any and all repairs.” Needless to say, the vagueness and potentially expensive nature of that statement didn’t go over so well.
Agents have to learn to count to 10, take a breath, and write or lose offers until they get the one that sticks, said Nelan. Sometimes you also have to know when to pull back. Agent’s communication skills are certainly being put to the test right now, she added.
Scott Cort of Rodeo’s Beverly Hills office lists properties ranging from $600,000 to $13 million. Despite money being dirt cheap right now, there has been very little activity on some of his listings – a fact he chalks up to some sellers not being willing to drop their prices.
In contrast, he recently listed a short sale property for $699,000 (Mind you, all of his properties are A-A+) That listing netted more activity than some of his others combined
Cort said you have to be realistic with sellers up-front and have a lot of patience.
He draws up Excel spreadsheets for sellers and lets the comparables speak for themselves. In one case where a seller was asking too much for a property, it took a month of e-mailing back and forth for the seller to digest the realistic asking price. He finally came to terms with reality and dropped the price.
By Eric Billingsley, publicist, Rodeo Realty