Asking price: To set or not to set

In earlier articles, I’ve discussed the ways that sellers approach determining the value of their sale property and some of the strategies sellers use in setting an asking price.

A few FSBO sellers frame this question differently. They ask: Am I more advantaged in the current market by setting an asking price or by saying to all buyers, “Make me an offer.”?

Conventional negotiating wisdom argues that whichever side first proposes a price consigns itself to the weaker position. With property listed with a broker, sellers always set a listing (asking) price and terms. If conventional wisdom is true, this means that buyers are always advantaged by having the seller declare a proposed gross sales price.

I have seen non-real-estate negotiations where the conventional wisdom held true…and others where it didn’t.

Parties often negotiate over the value of a service or a one-time purchase of a right, like an easement. Whichever party most values what is at issue between them might be better off letting the other side to mention price first, but not always. Read more

How does a seller set an asking price?

Once a seller finds his way to a dollar number that he thinks represents the value of his property, he faces a set of decisions about asking price. Should he set an asking price higher than, equal to or less than what he believes is the value of his property?

Part of the seller’s answer will be determined by what he needs to net out of the sale after-tax. This net number factors in all deductions from sale income—transaction costs, taxes (local, state and federal) commissions, fees and expenses.

Another part of the answer is shaped by the seller’s judgment of current market conditions. Where a lot of buyers are chasing a relatively few number of properties, the market will bear a higher price. When few buyers are tire-kicking a lot of sale properties, or not tire-kicking at all, the market price can drift below the true value of the seller’s real estate.

A third factor is the intensity of the seller’s motivation. Desperate sellers may set a too-high asking price to cover their needs even though they doubt that a buyer will come close to it. This is the psychology of hope. It’s why we buy lottery tickets, despite the odds. It doesn’t work very often. Desperate sellers usually do best by setting an asking price that will attract buyer interest in a buyer’s market. Read more

Sellers: Sticking on price keeps you stuck

I’m trying to figure something out: With rural property showing for-sale signs rusting in place, why haven’t sellers lowered asking prices and offered financing?

I spent several hours this weekend looking at rural listings around the country. Thousands are advertised, with many of each type in the same place at about the same price.

Few sellers appear to have come off their original asking prices during the last six months. In most areas, sales seem slow. Suburban sellers have cut their prices by 25 percent or more. So why aren’t rural land sellers doing the same?

First, rural sellers may not have as urgent a need to sell. Turnover in rural property is lower than in suburbs where homeowners are subject to job transfers and financial volatility. Rural sellers are often able to wait longer.

Second, sellers in a weakening market are inclined to imprison their asking prices with backward-looking expectations. Since prices and sales were strong a year or two ago, therefore, seller reasoning goes, they should be strong now (even if they’re not). Read more

Sellers! Help your buyers

I looked at a small wooded tract a couple of weeks ago.

Before visiting, I asked the seller if he had a deed that he could send me so that I could run the calls through a deed-mapper program to check the acreage. He said that he did, but that he would not provide it. “Go get it at the courthouse,” he said. The courthouse was a five-hour drive away. I asked for the deed book and page number, so that I could phone in a request. “Look it up,” he said.

Most questions were met with stonewalls and an I’m-too-busy-to-be-bothered attitude.

What advantage could this seller have thought he might be achieving by acting this way? Beats me.

I’m reading an excellent book on negotiating by Steve Cohen, Negotiating Skills for Managers, McGraw-Hill, 2002, $14.95. Steve runs The Negotiation Skills Company outside of Boston, which provides professional negotiators and assistance. www.negotiationskills.com.

Sellers will help themselves in negotiations by being civil, helpful and honest.

Hey, Hey. Ho, Ho. Fabulous has got to go!

Words mean as much in selling real estate as they do in selling a Presidential candidate. Every campaign — whether in politics or property — spins its words to feature its candidate’s assets and redecorate the liabilities.

Often, the best tactic for selling anything is to tell the customer: Don’t look at this; look at that. “Sure, this pickup truck only gets eight miles to the gallon, but you won’t find a redder paint job this side of Beijing, and those cupholders…they’re the best in our weight class!”

As I read the real-estate classifieds on Sunday, I was struck by the number of properties that were awesome, beautiful, breath-taking, charming, elegant, exciting, extraordinary, fabulous, gracious, great, ideal, incredible, lovely, luxurious, magazine-incredible, magnificent, must-see-to-believe, one-of-a-kind, picturesque, pristine, private, spectacular, stunning, superb and terrific. Read more

Next Page »