Have you ever said something in the heat of the moment, then wished you could reel those words back in? The truth is that all of us commit emotion-driven mistakes in some areas of our lives. But when it comes to selling a home the stakes are simply too high to allow your transaction to fall prey to predictable emotional pitfalls.
Fortunately, when it comes to emotion, what’s predictable is avoidable. Over the years, I’ve found that sellers can and often will get themselves in check if I can help them predict the specific emotions they are likely to experience at various points in their transactions.
This list can help you predict and avoid some common seller decision traps driven by emotions.
1. Price reduction paralysis.
In cases of overpricing, many sellers start out as overconfident in their home’s prospects on the current market. But as the days on the market turn into weeks, or even months, that overconfidence morphs into panic. This panic potentially snowballs into increasingly disastrous hypothetical scenarios, and fast.
Unfortunately, this panic is often accompanied by a fear that reducing the home’s list price will kick off this snowball effect. This couldn’t be further from the truth. When a home is dramatically overpriced, cutting the price is the only way to fix the scenario and render the home more compelling to buyers. In some cases a price reduction causes a listing to hit a sweet spot where it receives multiple offers and sells somewhere between the reduced price and the original list price.
But sellers who cannot manage their fear and panic often end up paralyzed, unable to cut the list price. And this begins the snowball effect of more and more days on the market, which aggressive buyers watch until they believe the seller’s desperation will make them amenable to a lowball offer. The best way to help neutralize this panic is to work is to put a price adjustment action plan and timeline in place before it ever arises.
2. Excessive attachment.
To sellers, their home is the place where a daughter took her first steps, the place a bride was carried over the threshold, maybe even the place their parents built with their bare hands. The hard truth for them to accept is that at the moment they made the decision to sell it, their family’s precious place became an asset which, like any other good one would sell in the course of business, must be wisely marketed and priced and transacted for.
Sellers who are excessively attached to a home are likely to:
- overprice it
- ignore market data, like the recent sales prices of comparable homes nearby
- disregard their agent’s staging advice
- improperly prepare their home for the market, failing to update or neutralize the decor
- be irrational in negotiations around price or repairs
- refuse to respond appropriately to market feedback, like no showings or offers even after it’s been on the market for weeks or months.
Sellers must remember that buyers don’t know the emotional value their home holds for them. Nor do they care or have interest or intention to pay for it. If you truly want to sell it, you must release yourself from your emotional attachment to it.
3. Celebrating too soon.
In sports, some say that celebrating too soon can cause you to relax and play less aggressively or less defensively for the rest of the game, giving your opponent a chance to make a last minute comeback.
And the same is true in real estate. Multiple offers and above-asking sales prices happen frequently on today’s market, but some sellers assume their home will be in that number way before they even sign the listing agreement. Sellers who “celebrate too soon,” so to speak, can put themselves at a disadvantage in a number of ways, like:
- Cheaping out on staging, failing to do all the items on their property prep list
- Overpricing their homes, assuming the demand-supply imbalance will automatically swing in their favor
- Getting sloppy in how they maintain their homes on a daily basis, while they are still on the market, and
- Making large purchases or spending their house proceeds “in advance,” while the buyer’s loan and inspections are still pending.
Even on today’s market, deals sometimes fall out of escrow because a buyer has a change in their life, their job or their family, or because they simply turn out not to qualify for the loan they were pre-approved to receive. Sellers need to stay vigilant and keep their houses meticulous and their finances in good shape throughout the entire time frame from property preparation through close of escrow.
4. Price confusion.
Some sellers have a confused understanding of the mechanics of determining the fair market value of a home and setting a list price. This leaves them vulnerable to the trap of letting their financial self-interest and fantasies for the future get in the way of setting a smart list price.
A home’s fair market value is defined by what a qualified buyer will pay for it at a given moment in time. Yet some sellers are so emotional about their plans for the next stage of their life that they convince themselves to base the list price for their current home not on its fair market value or marketing considerations, but based on how much money they need to fund their next home purchase or move.
This is the quickest, most lethal route to pricing a property so high no one comes to see it and it lags on the market. And that road usually ends in no offers at all, or very low ones. Sellers should understand that overpricing actually endangers their vision of moving forward with their lives, rather than somehow magically financing it. Allow your agent to recommend the best sales price by referencing comparable sales data and market feedback like low buyer traffic, comments from buyers broker’s and DOM data.