When home Buyers are looking for a home (or land) they spend a lot of time searching the online MLS and filtering properties (100’s) and comparing prices. Buyers have a maximum budget for their purchase, and they have some firm ideas about what they would consider the ideal location, an acceptable view, a good floor plan, a great kitchen, and so on. When they find the right property, they decide how much to offer, and then they proceed to make an offer and negotiate their best price and terms. But home buyers most often do not consider the seller’s perspective. There is a huge gap between the buyer’s mindset and the seller’s mindset in this recession, and if buyers don’t understand some of the seller’s thinking, they may get frustrated in the negotiating process and kill the transaction unnecessarily.
What can home buyers expect from sellers? What is the mindset of sellers? For owners who purchased their property years ago, and especially if they purchased their property when the market was peaking from 2000 to 2007, they are under a great deal of emotional stress (and financial stress) when it comes to listing their property at a reasonable listing price. Many sellers feel their property is special. That’s understandable since they bought it precisely because they honestly felt it was the best property. Sellers can talk at length about the special features of their property, how much they have in it, and why it is worth so much money. Sellers pour a tremendous amount of emotional energy into this subject as they talk to me about their property. I understand their feelings, and I empathize with sellers.
From the home buyers perspective, none of these things are relevant, but the seller’s mindset is that these things justify the price. Therein lies a huge emotional gap between buyers and sellers, and this gap is greatest during a prolonged real estate recession like the one we’re in now.
Home Buyers v. Home Sellers
Sellers are also caught in a very stressful situation, and here’s what it is. They are not necessarily real estate experts on the subjects of value, marketing, sales, negotiating, legal issues, documentation, and due diligence. In fact, very few sellers are. Having practiced in real estate for 37 years, including 20 years as a real estate attorney, I can tell you with confidence that 99% of home sellers are definitely not experts in all of these subjects. Many sellers think they know how to price a property or how best to market it, but many are wrong. Yet they think they really do know. Imagine a very successful professional in their 50’s or 60’s who needs to sell a property. They often have some strong convictions about how their property should be marketed or how a Realtor should conduct himself. I cannot tell you how many times sellers have been wrong. I could tell a hundred stories about how sellers were later proven to be terribly wrong, but we don’t need to do that here. This is in no way disrespectful toward sellers. I have a wonderful relationship with my sellers and everyone I work with. But I also tell the truth, and I believe honest sellers who are humble will agree with these statements. The point is since the vast majority of sellers are not real estate experts, being in a position of having to market, negotiate and sell real estate in this difficult market is very stressful, especially when they are forced to rely on other people to get all this done.
The stress for the sellers only increases when they must hire a Realtor to do all these things, and they don’t trust Realtors generally. Many sellers have had a bad experience with one or two or three Realtors. Now when sellers interview a Realtor about listing their property, they often give that Realtor the third degree, ask 101 questions, and even after good answers the sellers will still feel uncertain. I can testify that the relationship between a Realtor and seller does not start out on a strong foundation when the seller’s approach is one of suspicion and mistrust from the get go. Sellers’ attitudes are quite understandable, because as I already said, many have had bad experiences with Realtors in the past. Unfortunately, sellers are often unable to discern the difference between a truly competent and professional and honest Realtor and one who is not. All of this creates tremendous tension and stress for sellers.
What can home buyers expect from sellers? Sellers are likely to feel their property is worth more than the buyer thinks. Sellers will attribute an emotional value to their property that the buyer has not yet developed. Sellers bring a lot of baggage to the table. That’s not a criticism; it’s just reality for many sellers today. Many sellers plan to use the sale proceeds to buy another home, and they often establish in their mind how much they need from the sale to buy their new home. Of course, this has nothing to do with fair market value, but sellers often insist they get a certain amount for their property based on their needs. Sellers also too often are taking a loss on the sale, and for many they refuse to take a loss. Home buyers don’t need to dwell on the struggles that sellers experience, but it is still important to understand why sellers can be so difficult to deal with.
The Lesson for Home Buyers
Home buyers would do well to at least be aware of the kinds of struggles that sellers experience. Understanding these things will not effect the offer or the buyer’s negotiating stance, but a little bit of empathy can go a long way in what can be a tense negotiation. For professional Realtors like me, the job is harder than it has ever been, but mostly because of the stress and mistrust sellers bring to the relationships. My job as I view it, is to help sellers and buyers come together amicably and reach a full agreement on the price and terms and get to closing without any crises. I do that willingly and with empathy for the sellers. I love my work, but it can be emotionally taxing.
Last Updated on December 18, 2013 by Chuck Marunde