Danger--6 Warning Signs to Overpricing
A listing agreement, as any contract, forms a partnership, in this case between the seller and the brokerage, with each having a set of responsibilities to carry out for a successful result.
Primary Responsibilities for Each Party
--The Salesperson: to expose the home to potential buyers and the REALTOR® community to attract a best price sale.
--The Seller: to price the home competitively with the salesperson’s help. This allows the marketing to gain interest from potential buyers and other REALTORS®.
Yet many sellers overprice their homes. Here are 6 reasons:
1. Lack of motivation. Without a good reason to sell, it’s hard to convince a seller to price within market range.
2. A Seller-centric mindset. The motivation exists but the Seller can’t see beyond his own needs and wants and is unwilling to look from a buyer’s eyes. For example, the seller wants a certain price—despite the market-- because he needs the additional money to help pay for the move-up home he’s buying.
3. Misconceptions about the value of features. The seller added a pool, for example, and wants the $25,000 installation cost and possibly more. Yet buyers may only attribute a value that represents about 30 to 40% of its cost.
4. Disparate thinking with multiple sellers. Couples selling their home, couples separating or siblings selling an estate can have contrasting degrees of motivation. The least motivated tends to dictate the price, resulting in overpricing.
5. The home is overleveraged. The seller has little or no equity due to remortgaging or buying with little down in a seller’s market. So mortgage payout penalties and selling costs are added to the list price.
6. Market testing.The seller merely wants to see what if any offer he might negotiate with no intention of acceptance or sale.
These and other motives can lead to stressand the salesperson may give in to seller pressure to advertise more. Yet misplaced motives render the best marketing efforts ineffective and costly as buyers ignore overpriced listings.
A seller can become disenchanted with the salesperson, even when the importance of a market price is emphasized, in spite of efforts to please in extra ad costs, time and resources. To the seller, no selling results are forthcoming and the partnership erodes. Often the seller relists the home with another salesperson, under the same conditions, and the stressful cycle begins again.
A good contractual partnership results in a successful sale when the parties focus on collaboration to attain shared realizable goals, with both parties carrying out their respective responsibilities.