The Psychology Of Sellers
What are you going to say to your sellers about their listing?
From the very first moment you walk through a potential seller's door, you'd better have given a lot of thought to what you're going to say to them. The psychology of sellers is complex and something that you need to master in order to consistently list properties without losing them to other agents who simply understand this psychology better than you do.
For example, there isn't a seller who gets excited when you suggest a price for the sale of their property that's less than what they had in mind. Each and every seller has a specific number in mind, whether realistic or not.
It is your job to explain to them where the number you suggest is coming from. But more importantly, you've got to allow them the opportunity to make their "presentation" about the number they like.
Sellers have a tendency to be overly optimistic, whereas you are the realist. You are hired to give the seller a price, but often they don't want anything approaching realism.
This can be tough. We've all been there. I've been all excited to tell them that their home is worth a whopping $300,000, but they stop me cold by telling me that they know it's worth $350,000. That $50,000 is a huge chunk of seller psychology to have to wade through.
Your best ally in a situation like this is time. Sellers need time - sometimes a long time-to adjust to a price that isn't what they wanted. They have all kinds of built-up beliefs in their minds why their home is worth so much.
After all, they put so much work into maintaining the landscaping. Then, there was the stone fence they installed, which creates a nice private patio space in the backyard. Not to mention the extra bedroom addition over the garage. Now, surely that justifies the price, right?
Alas, we real estate agents seem to be the only ones who know that the only thing that justifies the price is the market. Period. It doesn't matter if the seller built a clock tower and a heart-shaped pool. The market is the market, and if they can't justify the numbers, then the home won't sell.
And, of course, sellers are notorious for making all sorts of plans for what they're going to do with the money when they sell - winter trips to Cancun, a Lincoln Town Car, or a 30-foot cabin cruiser. When they hear an amount substantially less than will cover these fantasies, you begin to lose them.
The best way to slowly bring them back into reality is to explain the process of selling a home in relation to optimistic vs. realistic pricing. While this isn't going to convince them right away, it will accomplish two objectives:
- It will plant the seed of realistic thinking, which will grow and blossom when their home doesn't sell for the optimistic price.
- It shows you know your stuff. Why not use this opportunity to demonstrate your expertise? This is better than doing what every other agent does by saying, "Sure, I can sell your home for $350,000." Then, it doesn't sell and they've totally destroyed their relationship with the client.
Here's a tip: Find out their price first. When they tell you, let them know you respect them. Tell them that there's nothing wrong with being optimistic. But, then let them know that it's your job to be a realist.
Then, make your presentation about the market. Show them how national (and global) conditions affect their neighborhood. Break all the numbers down for them. Be a wealth of information on tap.
After all this, if they're still not prepared to be realistic right now, don't come down hard on them. That's a sure way to lose them forever. Many a sale has been lost because the agent hammered too hard on price at the first meeting.
Tell them it's okay. Just remind them that they could be losing out on valuable market time. (Which I assure you is something they don't care about. Most sellers would rather lose months than to give up $50,000 in one sitting.)
As long as you're honest about where the market is - while acknowledging and respecting their optimism - there's nothing wrong with working with their optimism. Communicating with them like this doesn't force them to show you the door.
Next step: Create a plan for them. Start the plan with their optimistic price, and set guideposts for reductions as the home doesn't sell. Tell them that the only way you can work with their optimism is to give it a time limit. Make sure they understand that if a home doesn't sell in a particular period of time, it means that it's overpriced.
While this process may take longer as you sit and wait for their home not to sell so you can eventually do a price reduction, at least you have an agreement with them that they will reduce the price. They remain your client - not another agent's. The relationship remains intact. Better to have an eventual sale rather than a slammed door.
As long as they understand regular price adjustments based on the market, they at least have a little hope. Which you must respect.
The key to working with sellers is to work with their optimism. Understand it and respect it while you slowly plant the seed of realism by re-educating them about how the market works.
The psychology of sellers is simple. They have pride in their home and they don't want anyone to tell them that their "masterpiece" isn't as nice as they think it is. When you wrap everything you say in the blanket of a deep understanding of this emotion, you can slowly bring realism to them.
And eventually sell their home.