I went on a listing appointment yesterday. The homeowners, a friendly business litigation attorney and his wife, asked lots of questions about the selling process. Eventually the subject of price came up. I showed them the comps which clearly indicated the value of their home to be between $2.3 million and $2.5 million. Homes do not sell for a set price, I explained. Homes sell in a range. My job was to get them to the high end of that range or beyond.
I noticed a slight wince from the husband when I gave the numbers. What about the house two blocks over, he asked. Having clearly done his homework, the man pointed out that this comparable property had listed for $3 million and was now in escrow after having been on the market for only 17 days.
True, I said. However, the house in question actually sold for $2.9 million, then after inspections and a repair credit had been further reduced to $2.75 million. I knew this because, as part of my due diligence, I had called the listing agent of this other property who was surprisingly forthcoming about the reduction. Besides, I pointed out, this other house had many features which put it in a different category.
The wife seemed to get it. But the husband shook his head. With a stubbornness that probably made him a very good lawyer, he said he wanted the list price to be the same as what the other house had sold for: $2.75 million.
How often does this happen? More often than not. Most homeowners have an emotional attachment to the value of their property and no amount of logic alone will change their minds. Fortunately there is one technique that I have found to be very effective in giving people a different perspective.
I asked the attorney to take off his seller’s hat and put on his buyer’s hat. What if his home and the home he was comparing it to were the only two for sale? Which one would he buy?
The attorney paused. Out loud, he went through a checklist of all the attractive features of his own property. Charm. Guest house. Closer to schools. Walking distance to the shopping district. I ran down a list of the other home. Larger square footage. Pool. Updates. Bigger lot.
Which one would he pick? And why?
We talked it over for a while. All the pluses and minuses. In the end, the attorney was more convinced than ever that he would choose his own house over the other one – but admitted reluctantly that most serious buyers probably wouldn’t.
With this insight, we were able to discuss the different pricing strategies and finally arrived at a more realistic list price that was sure to get this couple the best possible outcome.