Have you heard the old saying that "Pride comes before a fall?" I have, and I've also seen it in action quite a few times. It is unfortunate to say, but over the years in real estate it seems to be a fairly common yet avoidable occurrence. It is always too bad when real estate deals fall apart needlessly. One of the more common reasons is a contest of wills, or an inflated ego. The seller draws a line in the sand and does not want to move any issues across it. Neither does the buyer. My experience shows me that the person with the biggest ego usually wins the battle but loses the war to it, but boy did he show them whose boss! Lately this seems to be occurring more and more. Sellers are mentally stressed to the max, and buyers are nervous about proceeding further in a deal. Home sellers that would normally listen to reason and advice from their agents are in denial, and many times are irrational in their thought process. They do not listen to sound advice, and emotions rule the day. This is a market where time is money, and a sale today maybe worth more than a sale a few months form now or a year from now. Who knows what the future will really bring in this real estate market? If they did let go of their ego and pride for a brief moment they may actually minimize their losses if guided by an agent that has a lot of experience in home sales.
For those that are veterans of real estate there are some axioms that seem to ring true on a regular basis. One of them is that if homes are improperly priced to begin with (priced too high) it probably means a major loss when the final offer is finally accepted. The other one "The first offer is usually the best offer!" This seems to be very true in our current market. On the first go around the seller refuses to look at a reasonable offer that is line with the most recent comparables from recent sales. They feel at this price they are giving the home away, and on top of that have to pay commissions. So when it comes down to the nitty gritty in negotiations, an inspection repair etc...the seller's refuse to budge on minor issues, and guess what? The buyers walk.
In the Atlanta area there are loads of opportunities at the current moment, and the home buyers are well aware of it. They are not in a rush; they are looking for a real deal! That is why it is called a "Buyer's market!" When the next offer comes in many months later a repentant seller that had time to think about it...may be more likely to negotiate a deal that is even worse than the previous deal. This is a market where the seller does not have much choice given the alternatives, and the decline in home prices. The best advice I could give an Atlanta home seller? Hire a very experienced agent, ask to see all the statistics of the local market, and know exactly what has to be done before you list your home, and then price it correctly. Have good idea on what could occur in sales price on the worse case scenario. And lastly, keep an open mind, don't act rashly or impulsively, and never say "Never!"
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Pride can be a nasty attribute. And needless for sure when it is all about ego. We once had a client that brought an attorney to the settlement table only to argue over a $175 charge ... she then pulled out $500 cash to pay him for his time. Plain stupid. She didn't want to believe anyone and always had something to argue about.
Well said, Jim. And at times, it's the ego of the agents involved that get in the way too. Buyers and sellers need to make sure they're working with a real estate agent who has their best interests at heart, not the agent's own personal "stats."
Giving a net sheet with all associated costs + several low price scenarios can help prevent that. That helps me, as a list agent, determine where the seller's real bottom line is and how realistic they are. We have to start refusing to take these overpriced listings but that is another whole can of worms!
Jim,
Great advice. I've never understood how deals can fall through for something as small as a couple of hundred dollars. Ego is certainly the culprit in many cases.
Rich
Steve Kappre, Gloucester - Camden County NJ Mortgage Loan Officer | 856-419-3561 (Treasury Mortgage | Mortgage Company - New Jersey) It is amazing how counter-productive it is.
Tanya Nouwens, Montreal Real Estate Broker (JJ Jacobs Realty Inc/Ready, Set...Sold! Inc, Montreal Canada) I totally agree, and the wrong agents can inflame the situation by throwing gas onto the fire and really make it uncomfortable for everyone. Could you blame a buyer for walking away when this happens?
Renee Burrows - Las Vegas NV Valley - Homes For Sale - Real Estate Market News (The Force Realty -Realtor>Estate>Probate>REO>Short Sale) I really do not take any overpriced listings...it never pays for the reason I mentioned.
Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Long and Foster® Real Estate, Inc.) So true, I've seen deals fall apart for less than that in good times, and the sellers end up taking a real loss down the road.
Jim, we all have seen the deal where the seller is paying carrying cost and will not get over paying 2k in closing cost. Only to sell the property 8 months later for 10k less than the first offer months earlier. BUT the seller did not pay the closing cost!
Frank Rubi New Orleans LA | Kenner | Slidell (Frank Rubi Real Estate | Homes for Sale | Lic. in Louisiana ) Frank it is a very common occurance...and very scary.
Exactly! The first is usually the best offer, so humility about loss is required to walk in renewed change. Good post!
Colorado Springs Realtor - Cherise Selley (Selley Group Real Estate, LLC) Thanks so much! People need to check their egos at the door!
Jim I often hear from the seller "I am not going to give it away". At least not yet in my opinion.
John Walters (Licensed in Slidell, Louisiana) (Slidell, Pearl River, Lacombe) John, you and I must work with the same folks. I hear that a lot.
Jim,
Love the post. So true that pride is tough to bring as a seller in today's real estate markets. Most likely the sellers will feel like they are giving it away and the buyers will wonder if they could have stolen it for less.
All the best, Michelle
Michelle Francis, Atlanta GA (Tim Francis Realty) Everyone must understand there are two side to every issue...,unfortunately the buyers are the ones with the money these days.
Sounds like good advise. We have all expereinced it and probably will again. This is why it's so important to have the stats and be the expert they are paying.
Very well said Jim! I don't know if you remember, but we met in Orlando at the RE/MAX convention!
Jim O'Donnell (Keller Williams Realty) I totally agree.
Susan Mangigian, West Chester PA Realtor RE/MAX Preferred, ABR (RE/MAX Preferred, West Chester, PA, RS152252A) Thanks! Yes I do! I love those conventions there is so much to learn.
Well said! I would have to also add "Denial" to the deal killer. So many sellers just can't -- or won't -- acknowledge the current home values.
Hi Jim -- Very smart and experienced agents understand this in their core, but I know I have been guilty of assuming some level of this understanding with my seller clients, whereas I thought I communicated these concepts clearly to them but realized after the fact that they only had a superficial understanding and I made too many assumptions without clearly repeating how things work, setting expectations, etc.
Hi Jim, Well written post. My bet is that the market has taken away a lot of the leeway we used to enjoy in the negotiation process. Thus, sellers have to dig in early and hold !
Have to agree about the never say never because in a few months it could be OK, I'll take it. Good post.
I too often see seller's ego get in the way of success.
I just closed (Friday, July 30) on a deal that began in April. Talk about ego/pride getting in the way of the deal! Its a miracle that it finally closed!
Yes, it's a dilemma all realtors encountered often throughout their career. Unfortunately this train of thought is not just limited to real estate. Great post Jim and best of luck to you.
Good advice Jim. Sellers need to listen to their agents and they might come out with more money in their pockets. Hanging on to a home in today's market is not a good idea.
KERRY LUCASSE - Your Intown Atlanta Real Estate Consultant (Keller Williams Peachtree Rd) It is sad to say, but I think a lot of this is also fueled by agents that do not have enough experience to tell the sellers the real truth about the situation.
Chris Olsen Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) It is probably not you. I note that many a seller forgets quickly what you advised them form the beginning. Just remind them...you told them so.
Bill Gillhespy Fort Myers Beach Realtor (Century 21 Tripower Realty) The problem is that many sellers think they will only have to hold on for a short while before the prices firm up. The way I look at it is that if prices have not held or risen with historic low mortgage rates...there is a greater chance they may fall further. It is a classic sign of deflation.
Lyn Sims - Northwest Suburbs (Schaumburg Homes - RE/MAX Suburban) A well informed open mind can think for itself.
Randy L. Prothero - Hawaii REALTOR® (Century 21 Liberty Homes) It really is too bad they do not realize the damage they do.
Joni Staples (Better Homes and Gardens RE - Anderson Properties) By the Grace of God you got it closed. Way to go!
Jerry Murphy (Long Real Estate) Thank you Jerry. Ego shows up in many places in life.
Kay Van Kampen-Springfield, Ozark, Nixa Greene County Missouri Real Estate Agent (RE/MAX Broker, RE/MAX Solutions) The only thing certain is what we know today. We cannot project where hte market would be 3 or 4 months from now.
Great post, Jim.
I always tell people that NOTHING kills a real estate deal like pride and ego!
Rob Magnotta - Huntington Beach Short Sale Agent (Direct Property Service) Sometimes...it is good to just let go.
In many cases the seller is sitting in a home with a second mortgage that was used to pay his bills ( vacation?) or buy the Corvette in the garage. But he won't "Give the house away".
You just have to laugh.
Good advice, Jim. Unfortunately, I've had buyers lose out on some wonderful homes because the seller's agent said stupid things like "I'd never let a seller agree to that." sigh. When will some agents ever learn that it's not your decision -- it's the decision of the seller and our job to present the facts, not interpret the law. Gee whiz.
Jim & Cathy Wood Greater Nashville Area Real Estate (Crye-Leike Realtors, Inc.) I once asked a potential seller that had no equity in their home after they tapped into it...did they save any of that money? They told me "No." So I told them that "Santa clause only comes once a year."
Gabrielle Nemes, GRI, SRS, SFR, Auburn, WA (RE/MAX Select R.E.) Over the years I have worked with many agents that took positions like that. None of them are still in the business. Things are tough enough...and I often wonder have any of these agents ever wondered why no one wants to work with them or show their listings.
So many times I have seen buyer think they can wait on the next offer because they just know it will be higher or better. And then that next offer never happens.....
Mark Brian (Silver Star Real Estate LLC) Even in good times this is a common occurance.