There’s no doubt about it – real estate is stressful. Whether it’s buying or selling, the process of moving is often ranked as one of the most stressful life events a person can experience.
It’s a fact that we’re well aware of on our team. There is a famous poster from 1939 that the British government produced in preparation for the Second World War. Here it is.
The purpose of the poster was to strengthen morale amongst the British populace in the event of a wartime disaster such as mass bombings.
In the last number of years, it’s been turned into a meme where people take the poster or the saying and adjust it a bit. Here is our new favourite version!
While difficulties in finding a new home is naturally stressful, the feeling of having your home for sale and not getting offers is incredibly stressful. After all, so many things that come next depend on the result of the sale, and your life is literally put on hold during the listing process.
We’ve helped many seller clients steer their way through a sale process that doesn’t move as quickly as hoped – and we’ve also seen lots of listing agents fumble the ball and inadvertently cause things to be even worse for their seller clients.
Here’s the three things that can totally derail a listing and how we help make sure our seller clients are able to recover and get the property sold!
Disaster #1 – A good comparable sells for less than expected.
There is nothing as frustrating as having a property that is a good comparable (in terms of location and attributes) sell for less than expected.
This happens more often than we would like, as inexperienced agents or anxious sellers accept an offer that is far less than what they could have received with proper negotiations.
When this happens, every agent that has an interested client brings up that property in the negotiations, attempting to sway our client into accepting a lower price.
We cannot change the fact that another seller took a price that reflects poorly on our listing, but we can control our response.
First and foremost, we refuse to be anchored by the sale price of this comparable. In negotiating, the term anchoring refers to when a number acts as anchor, influencing subsequent judgments and decisions throughout the negotiation, even if it’s arbitrary. The buyer and their agent have been anchored by this price and are attempting to convince our seller that their value needs to be reevaluated based on the other sale.
In a situation like this, we believe that as your listing agent we need to be specific and aggressive in our response. By using specific details about that listing (square footage, lot size, number of bedrooms, bathrooms, layout, finishes, parking and so on), we counter the assumption that the property sold at a reasonable price and can be used as a comparable to our property.
We are aggressive in making it clear to potential purchasers of our property that either the seller of that comparable was desperate or their listing agent did a poor job for their client. Regardless of the reason, we aren’t going to make the same mistake. While that can be challenging, remember that a major part of negotiating is holding your stance and being willing to walk away from a deal that is unfavourable.
Disaster #2 – The market doesn’t agree with our price.
There are a large number of factors that go into deciding upon a listing price for a property.
The detailed work up we do when helping a client decide on their listing price looks at a number of different factors, including market changes, comparable properties (for sale and recently sold), MPAC property assessments and more.
This analysis allows our client and us to decide on our listing strategy. We develop a story and rationale that supports the sale price we hope to achieve and then we communicate effectively to prospective buyers and their agents. While this can be very useful during negotiations, in some cases, the market doesn’t agree with our price and we receive fewer showings than expected or no offers.
In a situation like this, some sellers panic and lower the price too much, or accept a low ball offer that is below the actual value of the home. We would say that when a listing isn’t selling, the way your agent reacts is critical to the eventual result.
First and foremost, it is important to present a calm façade to buyers and their agents. It is naturally the job of a buyer’s agent to push for the best possible price for their client and when a listing isn’t selling, it is not uncommon for agents to try to get a tremendous deal for their clients. We regularly encounter situations where a low-ball offer is made that should not be accepted by our seller clients. While the final decision is always that of our client, we believe it is our job to say when we can do better than an offer that is just too low. It seems like more and more listing agents tell their client it is up to them to accept or reject an offer, and completely skip the stage of negotiating for a better deal or offering additional information for the seller to consider.
Regardless of the urgency of the situation for our seller client, our job is to strike a balance between willingness to be reasonable and comfort with waiting until the right buyer comes along. A big part of that conversation is helping our seller understand the financial implications of selling now versus later. In some cases, accepting a lower price makes sense due to additional costs related to financing or carrying costs. In other situations, a seller could hold on for a number of months before they would come close to incurring costs equal to the “loss” from taking a low-ball offer.
Make no mistake, it is a challenging situation when the market doesn’t agree with the price and value we’ve determined for a client’s home. When it happens, you need agents who know how to adapt to the circumstances without giving up on still getting you the best possible sale price.
Disaster # 3 – Something unexpected happens externally, that changes the market.
The third situation that can take place is an unexpected external change that impacts the real estate market. Some examples can be:
- Extreme weather events, such as an ice storm, tornado or even extreme heat warnings.
- Regulatory changes, such as the changes to mortgage rules, capital gains structure and so forth.
- Economic crisis, whether local or broader, that impacts buyer confidence, such as the closing of a major company in a smaller market, international tariffs, interest rate movement, etc.
Generally speaking, we can’t predict these events and they can certainly impact the number of showings or offers. In situations like this, we need to assess the length of the impact.
- If it is short-term like a weather event, we can stay the course and understand it will take a bit longer to sell. The market returns to normal after thing stabilize, and people have the ability and time to look for homes again.
- If it is more than short-term, such as regulatory changes, it might be worth terminating the listing and waiting a few weeks or month to relist. Typically, such changes impact the market for a 4 to 6 week period before things settle down and continue in a more typical fashion.
- For longer term impacts, such an economic crisis, the decision needs to be made if our client can hold on for a longer time period, or if we are willing to adjust the price quickly to get out before more sellers decide to do so and the market drops.
When there are sudden, unexpected events that impact a sizeable number of people who may have been considering buying or selling properties, the assumptions and normal activity within the market get upended. While we can’t predict when these take place, it is important to assess them quickly and decide on the approach that works for our seller clients.
Regardless of which of the above situations take place, it is important for you to keep calm and carry on with a reasonable strategy. If you’re thinking about selling and you want to minimize stress while getting the best result, then get in touch with us to discuss next steps!
