There is a very 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 10 years or so, it’s been turned into a meme where people take the poster or the saying and adjust it a bit. My personal favourite used to be Keep Calm and Drink Beer but I’ve got a new favourite now.
I have noticed over the years that one of the biggest mistakes that a Seller or their Realtor can make is panicking when a listing doesn’t go exactly as planned. It can cost the Seller tens of thousands of dollars if their agent doesn’t know to deal with it.
So let’s talk about the three ways in which a listing can go sideways and how to deal with it.
- 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 I would like, as inexperienced agents or 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 me and my client to accepting a lower price.
In a situation like this, the listing agent needs to be specific and aggressive in their 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 also need to be aggressive in making it clear to potential purchasers of our property that the listing agent did a poor job for their client and that we aren’t going to make the same mistake.
- 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 I do when helping my 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 my client and I to decide on our listing strategy. It is not uncommon for us to decide to list on the high end of that analysis to see if we can’t find a buyer who doesn’t realize they are overpaying a bit. It is a calculated gamble and doesn’t always work.
As I discussed in my article on Three Ways to Price a Property, there are different strategies that can be followed when pricing. 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. It is important to present a calm façade to buyers and their agents. Regardless of the urgency of the situation for my seller client, my job is to strike a balance between willingness to be reasonable and comfort with waiting until the right buyer comes along. When we are willing to work with a slightly lower offer but stay firm against buyers trying to take advantage, we get a price that is as close to our listing price as possible.
- 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:
- Regulatory changes, such as the recent changes to the mortgage rules.
- Extreme weather events, such as an ice storm.
- Economic crisis, whether local or broader, that impacts buyer confidence, such as the closing of a major company in a smaller market.
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 an ice storm, we can stay the course and understand it will take a bit longer to sell. The market returns to normal after the clean up 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 my client can hold on for a longer time period or if we are willing to adjust the price down quickly to get out before more sellers decide to do so and the market drops.
In all of the three ways in which listings can run into problems, it is important for you to keep calm and carry on with a reasonable strategy. In many cases like this, I have been able to buy properties for my buyer clients when the seller panicked and accepted a lower offer.
If you or some you like is interesting in selling or buying, please get in touch with me. I’d love to keep calm and be responsible for what comes next.
Regards,
Jeff
CORNER DOORS
Except in very large rooms, a door only rarely makes sense in the middle of a wall. It does in an entrance room, for instance, because this room gets its character essentially from the door. But in most rooms, particularly small ones, put the doors as near the corners of the room as possible.
This is a fascinating lesson as it is something most of us rarely consider. Think of your favourite rooms in your current home or in previous homes and consider where the door was located. I imagine you will find that in the majority of cases it followed this rule.
I have been in some homes that broke this rule and it made the rooms only workable with particular layouts. By breaking the rule, the room is no longer an accommodating space and tends to be regulated to lesser functions such as occasional guest room.