The Weekend Post - Real Estate
Being realistic on price
SELLER conditioning is a rarely discussed phrase in real estate.
I must clarify, it does not refer to the condition or state of seller’s physical prowess, but a reference to preparing you, the vendor, for some “news” usually about the value of your home. That news is usually in the “bad” category – obviously no one needs to be prepared to sell for a higher than expected figure.
So seller conditioning is a necessary evil. Sometimes agents may have had a very realistic value in their minds, but time has passed, or market conditions change, more homes may have hit the market, recent local sales display disappointing results or interest rates rocket.
Many factors can turn a local market on its head in a matter of weeks and ultimately affect a sale price – it is not only possible, it happens all the time.
The initial assessment may have been pretty close, but that glitch in the market could hit a home’s potential value by tens of thousands and all in the blink of an eye.
And a good agent will be fully aware of this and working with you to ensure you are fully aware of the market conditions good and bad.
When this comes to the fore is often when an auction is the method of sale selected; values are discussed prior, at the start and during the campaign of course.
When seller conditioning really becomes a hot topic is if, and when, communication begins to fail between sellers and agents.
Seller conditioning refers to the process of when agents start to warn their clients of pending doom – the chance the offers maybe less than expected, and really there is no way to sugarcoat this.
I was involved with an auction recently where this issue came right to a head.
The week prior to the auction the agent started the process of suggesting the value was looking lower based on the feedback from the inspections.
The auction came along, the result was very disappointing and even after auction, negotiating failed to secure an offer anywhere close to the initial value agreed between seller and agent.
Now you have a scenario, a very common one, where the agent feels frustrated as they feel the client isn’t listening to the market, and a seller annoyed that the agent somehow has let them down in not securing the target sale price.
Two unhappy parties, no sale and what to do next? What went wrong, who is to blame?
There are two sides in cases like this.
A good agent has the obligation to keep open the lines of communication during the campaign, not only warning the seller about why values are cause for concern, but evidence of this – facts, figures, addresses.
In this situation I feel this was the issue; the agents knew their stuff, but simply claiming market weakness is not enough, it needs clear justification.
As an agent myself, I have been in countless situations when I have had to be the bearer of bad tidings and would never consider issuing such bad news without clarity and explanation, then followed up immediately with hope, suggestions for the next marketing move, and how to go forward. Again, I feel this does not always occur and really it should have.
There are some who do feel an auction defines market value, but it is not that clear cut, otherwise home sales that are achieved after the auction for more or less would not occur.
As for the vendors, I would say they felt battle scarred, a disappointing result, no sale and an agent wanting them to accept a certain figure and not offering any idea on moving onwards. Sellers, you do have to acknowledge it is not always the agent’s fault and the dip in the market can be very real, but you should demand evidence.
That low offer disappointing you right now, actually in a few months, could seem like top dollar – that’s the volatility of our housing market.
So seller conditioning is a necessary evil, it does need to be done, but agents you have to always ensure your updated advice is not only quantified, but comes with suggestions for the next step. Sellers, you need to be aware how quickly markets/values can change up and down.
Agents want to sell high to have happy clients, but sellers should expect detailed market advice if they don’t get it.
If you don’t feel a way forward is being offered, change agents.