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Selling a home can be an emotional and challenging process, with the primary objective being to achieve the highest possible price. However, many sellers find themselves pressured by their real estate agents to lower their asking price soon after the property hits the market. This practice is not uncommon, as agents aim to make a quick sale, even if it means settling for a price lower than initially listed. Understanding the tactics used by agents and the dynamics of the real estate market can help sellers navigate this process more effectively.
One of the primary reasons many homes are priced too high is that most agents give an overestimated value of the home before it is put on the market. This tactic, although seemingly beneficial, is often a strategic move by agents to secure the listing. In the fiercely competitive real estate market, agents know that being honest about a home’s actual value could cost them the chance to represent the property. They inflate the expected sale price, creating unrealistic expectations for the sellers.
Once the listing is secured, these agents then rely on what is known as the ‘hope method.’ Essentially, they hope that a buyer will come along and make an offer that is at or near the inflated asking price. However, this approach rarely works as intended. Selling homes that are overpriced can be quite difficult, and these properties often sit on the market for several weeks or even months. To address this, the agent aims to convince the sellers that their asking price is unrealistically high, citing “the market” as the reason.
Agents often use the market as an excuse, saying things like, “The market says this,” or “The market indicates that,” to justify the need for a price reduction. Eventually, this tactic proves effective, and sellers reduce their expectations, often selling at a price lower than what their agents initially estimated. This three-step process—securing the listing with an inflated price, gradually lowering the price, and eventually making a sale—ensures that agents receive their commission, regardless of the final sale price.
Most sellers might not be aware that agents receive a substantial commission, regardless of whether the house is sold for a high or low price. The key thing that many sellers often overlook is that a lot of the tactics agents use to convince them to reduce their price expectations are nonsense. By recognizing the usual conditioning tactics, sellers can counteract the agent’s strategies and push the agent to fulfill their primary duty, which is to sell the home at the highest possible price.
The Hope Method
After initially creating an unrealistic expectation about the selling price to secure the listing, agents then employ what is known as the ‘hope method.’ Essentially, this involves listing the property at the inflated price and hoping that a buyer will come along and make an offer that is either at or near the asking price. This method is built on the premise of chance and optimism rather than a strategic pricing plan.
However, selling homes that are overpriced can be quite difficult. These properties often sit on the market for several weeks or even months without receiving any serious offers. As time passes, the lack of interest and offers makes it increasingly evident that the asking price is too high. To address this, the agent then shifts the narrative to convince the sellers that their initial asking price is unrealistic. If the sellers criticize the agent for initially suggesting a high price, the agent will counter by attributing the issue to “the market.”
Agents often use the market as a scapegoat, saying things like, “The market says this,” or “The market indicates that,” to justify the need for a price reduction. This tactic, though misleading, tends to be effective. Eventually, the sellers become convinced that their expectations were too high and agree to lower their price. The use of the market as an excuse helps agents avoid taking responsibility for the initial overpricing and shifts the blame onto external factors.
The Three-Step Process of Agents
In the majority of cases, houses are sold for less than their value because many agents follow a three-step process for making sales:
- Inflate the Sale Price to Secure the Listing: Agents often overestimate the value of a property to secure the listing. By presenting an inflated potential sale price, they create unrealistic expectations for the sellers. This tactic is used to win the listing in a competitive market where honesty about the actual value might cost them the opportunity.
- Gradually Lower the Price: Once the listing is secured, and the property fails to attract offers at the inflated price, agents then employ various strategies to convince the sellers to lower their asking price. They often blame “the market” for the lack of interest, suggesting that market conditions have changed or that the initial price was too high due to market fluctuations. This gradual reduction in price continues until it reaches a level that attracts buyers.
- Achieve a Sale: Eventually, the property is sold, often at a price lower than what was initially estimated by the agent. Despite the reduction, the agent secures their commission. Most sellers might not be aware that agents receive a substantial commission, regardless of whether the house is sold for a high or low price. The key thing that many sellers often overlook is that a lot of the tactics agents use to convince them to reduce their price expectations are nonsense.
This three-step process ensures that agents achieve a sale and receive their commission, while sellers often end up with less than they had hoped for. Recognizing these tactics can help sellers better navigate the selling process and push agents to fulfill their primary duty—selling the home at the highest possible price.
Seller’s Perspective
Many sellers are unaware of the strategies and tactics employed by agents to convince them to lower their price expectations. Agents receive a substantial commission regardless of whether the house is sold for a high or low price, which means their primary incentive is to secure a sale as quickly as possible. This often leads to a conflict of interest, where the agent’s goals do not align with the seller’s best interests.
Sellers need to recognize the common conditioning tactics used by agents, such as blaming “the market” for the need to lower the price. By understanding these tactics, sellers can counteract the agent’s strategies and insist that the agent works harder to achieve a higher selling price. The key is to remain firm and patient, pushing the agent to fulfill their primary duty—to sell the home at the highest possible price.
The Serious Buyer’s Myth
One of the most compelling arguments agents use to convince sellers to lower their price is the idea that “the most serious buyers appear within the first few weeks.” Agents often claim that if the home doesn’t sell during this initial period, the opportunity to secure the best price will be missed. This statement, like many other manipulative phrases present in the contemporary real estate industry, is only partially accurate.
Yes, it is true that the most favorable offers typically arrive within the initial weeks. However, it is not accurate to claim that if your home doesn’t sell within the first few weeks, you’ve missed your opportunity to get the best price. The reality is that the pool of potential buyers is constantly changing. In every region, there is always a specific group of buyers searching for a home. This group can be referred to as the pool of potential buyers. When a new home is listed, the majority of these buyers will take notice of it. If they decide not to purchase it—often due to a high price—it doesn’t imply that the ideal buyer won’t come along eventually.
Suppose there are currently 50 buyers in the market. Over the course of a month, some of these buyers will make purchases, while new buyers will also come into the market. This means that while you are likely to receive the most inspections within the first three to four weeks, it is not accurate to state that you cannot obtain the maximum price at a later time.
If your property doesn’t sell within the first few weeks, don’t feel discouraged or rejected. Simply inform your agent that new buyers are continually entering the market. Instead of following the agent’s recommendation to lower your price, you have chosen a different approach. You have decided to hold firm and wait for your desired price.
If you’d like to shift the situation and influence the agent rather than allowing the agent to influence you, inform them that perhaps you need a more competent agent if they are unable to sell your home. Don’t be swayed by the claim, “I’ve made the most sales in this area.” Being a leading agent doesn’t necessarily mean you’ll get the best price for your property. In fact, it’s often the reverse. Top agents achieve their status by persuading sellers to “follow the market” and reduce their prices.
Holding Firm on Price
As a seller, you have the right to hold firm on your desired price, even if it means waiting longer for the right buyer to come along. While agents may push you to lower your price based on their claims about market conditions and buyer interest, it is crucial to stay patient and trust your instincts. If your agent cannot sell your home at the price you believe it is worth, it may be time to consider whether you need a more competent agent.
Top agents often boast about their sales record, but this doesn’t necessarily mean they secure the best prices for their clients. Many top agents achieve their status by convincing sellers to lower their prices quickly, thus facilitating faster sales. Instead, you should focus on finding an agent who is committed to getting you the best possible price, even if it takes more time.
Patience can be financially rewarding. For instance, if it takes you ten weeks to earn an additional hundred thousand dollars on your home, that’s ten thousand dollars a week—a worthwhile return for simply waiting. By holding firm on your price, you can potentially achieve a much better outcome.
The Worst Case Scenario
When deciding whether to hold firm on your asking price or lower it based on your agent’s advice, it is important to consider the worst-case scenario. If you cannot sell your home for your desired price and you do not want to lower your expectations, the worst that can happen is that you end up keeping the property.
Ask yourself if you are okay with that outcome. If you are comfortable with the idea of holding onto the property, then you should feel confident in waiting for the right buyer to come along. Patience and resilience are key in achieving the best possible sale price.
By understanding the tactics used by agents and the dynamics of the real estate market, you can take control of the selling process and make informed decisions that align with your financial goals and expectations.
In conclusion, selling a home requires a balance of strategy, patience, and awareness of the tactics used by real estate agents. Many agents may pressure you to lower your price to secure a quick sale, but this is often not in your best financial interest. By recognizing these tactics and holding firm on your price, you can push your agent to work harder to achieve the highest possible sale price for your property.
Remember, the pool of potential buyers is constantly changing, and the right buyer may come along even if your home doesn’t sell within the first few weeks. Patience can lead to significant financial rewards, and the worst-case scenario is simply keeping a property you are comfortable holding onto. Empower yourself with knowledge and confidence, and don’t be swayed by agents’ conditioning tactics. Your home is a valuable asset, and with the right approach, you can achieve the sale price it truly deserves.