Raleigh, North Carolina. The Home Price Negotiating “Game” Is Done Best When Done Dispassionately. Unfortunately, that is usually not the situation when it comes to selling a home. If you to to Vegas you KNOW that if you engage in any kind of gambling the odds are EXTREMELY in favor of the house and heavily AGAINST you. I know that, you know that, and people who choose to gamble know that. I am not going to go into the psychology involved of why people gamble despite knowing this. Of course, there is a lot of psychology involved in the purchase and sale of a home. It is not based on the “take a chance - win big or lose big” type of gamblers psychology but rather (hopefully) on the more business like factors of the economy, the sale price of comparable homes, etc. Overall this is pretty much the case but that doesn’t mean that there aren’t many emotional obstacles may need to be overcome such as “This is where our children were born”, “You don’t know how many improvements we have made”, “Bob and Betty’s home isn’t nearly as nice as ours and it sold for a lot more than you are saying we should price our home at.” With regard to the last comment, the information the Seller’s have is most often notoriously incorrect. Usually because Bob and Betty didn’t tell the truth about what they got and don’t think that their friends or neighbors can or will find out.
The psychology of buying or selling a home depends on who the “players” are and what their needs and motivations are. The buyers may be a couple needing a home because they want to get away from apartment living, because they are being transfered in from another area, because they are first time buyers and want a home of their own, they are empty nesters who want to downsize, they have a growing family and need more space, they are enjoying the fruits of their success and want to buy or build their “dream home”, they want to move to a location that lets them do things they really like - hiking and biking in the mountains, swimming or lounging at the beach, etc., or they may be investors looking to start or increase their real estate holdings. Sellers most often have the very same considerations.
Enter the real estate agent. To start with, regardless of the reasons the buyers or sellers have for buying or selling a home, he or she (the agent) has to deal with the Offer To Purchase And Contract form. In North Carolina, prior to the state adopting Buyer’s Agency, this contract was highly leveraged in favor of sellers. They were considered to be the parties most at risk in such transactions and as such were given more consideration. When the state adopted Buyer’s Agency, as one of the agency types available, changes were made in the form that decidedly favored buyers. Changes recently made in the form both lengthened it and again shifted it in favor of the sellers. The form and “flavor” of the form have to be taken into consideration and most certainly help dictate the way Brokers advise their Buyers and Sellers as to how an offer should be structured and subsequent responses to it by both sides.
Sellers quite often have a strong sentimental attachement to the home they are selling which can make establishing a sale price difficult for the listing agent. When an area, the state or the nation enters an economic decline pricing is often forced on the seller that makes subsequent negotiations even more difficult. The fact remains that the existing market in any given area is affected by both local and national factors and will to a great extent determine what a home is (or should be) listed for and most certainly what it eventually sells for.
All of this comes to mind because of an offer I recently made to a Seller’s Agent in behalf of a buyer. The offer was at a price below the listing price and was based on a lot research done to determine a fair price for the buyer to pay and one that the home would appraise for. It was one of the realtively few times when I felt that a home under consideration by one of my buyer clients was well over priced. None-the-less, the seller was having none of it and made it plain we were relatives of the original robber barrons and that no negotiations were in order. It may well be that the listing agent had little choice in what the home is listed for and did all that was possible to get the home properly priced. Whether that is the case or not, the market will determine how soon the home sells and at what price. The selling price may well be further modified by what an appraiser for a buyer’s lender has to say. So, sellers if your listing agent presents you with a market analysis that is not to your liking you should most certainly make him or her back up his or her conclusions but understand that you are best served by not letting emotion rule the situation. Furthermore, once a price is determined you would be well advised to be prepared to negotiate price and terms as well. A plane that nevers gets off the ground “ain’t goin nowhere!”.
