In a tight market, beware the 'overpromiser!'
by Michael Forzatti
Last week I met with a client who was ready to sell their home. They informed me that while I was their preferred agent, they’d meet with some other agents as well.
A couple of days later when I spoke to them, they let me know that another agent they'd called in had assured them that they could fetch $800-820k for their home. I'd never heard of the salesperson that they'd consulted, but they didn't seem to know Palmyra too well as I believed the property would sell for $700-720k. That's an enormous difference.
Now, while I've been selling in Palmyra for a long, long time, if someone convincingly assured me that they could get an extra $100k for my home, I'd be all ears. Even if it was $100k more than the market leader for the area was suggesting! After all, who's going to turn their back on $100k, right?!
If it's real.
But it wasn't.
Here's what I realised as I was speaking to my client. There's a great temptation for an inexperienced salesperson to do one of two things with a potential client in a tight market: tell them whatever it takes to be their friend, and, cause this is usually the quickest way to make a friend, promise $100k more than the other salesperson!
In tight market conditions more than ever, you need transparency when it comes to the reality of the market more than you need a new friend!
Sure, you may be likeable when you tell someone what they want to hear, but when your advice isn't based on reality, you're doing no-one any favours.
The inexperienced salesperson was wrong. The home would never sell at $820k, or $800k. Aside from wanting to make a friend, they were basing their 'market appraisal' on sales evidence from a couple of years back. Things have changed markedly since that time.
A good agency in this market may well be a fine man or woman, but their prime objective is not to win a friend, it's to secure the best buyer for your home.
The truth isn't always so palatable in a market such as this. I understand that being told the value of your home has decreased $100k is not pleasant. Mind you, neither is having it on the market for months without a nibble.
The more volatile or uncertain a market becomes, the more experience matters. The more a market leader matters.
In a changing real estate cycle, our level of transparency in providing accurate and realistic advice is crucial. Getting caught up in emotive discussions based on pleasing potential clients and personal ego is a recipe for disaster.
Most reasonable salespeople will perform when the sun shines, but as the clouds roll over, it's not so easy. For some, this leads to desperation and over-promising.
'Good time agents', as we call them, have only worked through one part of a real estate cycle. They've seen the sun shine, but the impending clouds seem like doom. The good news for those who have navigated many real estate cycles is two-fold: first, houses sell in the gloom, and second, the sun will shine again. It may not come out tomorrow, but it will come out soon enough!
In conditions such as these, it's far more about blood, sweat and tears than it's about spit and polish. That goes for salespeople and those preparing their homes for market alike.
My clients from last week? They saw through the over-promiser to the aged evidence on which the price was based. They could spot that it was an assessment based on inexperience and acted accordingly.
The over-promiser is not always easy to spot, though.
All of this comes back to knowledge, experience, preparation and communication. It always should, but the most compelling presentation to the client will be the personal sales experience that supports the cold data of the day. Ask your salesperson how many properties they've sold in the area in the last couple of months. Where were they? How much did they sell for? How does this compare to a couple of years back? How long were they on the market?
I regularly work through the anatomy of recent sales with my clients to identify the effect of the starting price, sales price and time taken to realise the result, so our clients aren't making assumptions but reviewing reality.
The seller who believes the over-promiser sets themselves for a big fall. The home sits on the market, no one is interested, it becomes stale to the market and, months down the track, the same salesperson is pleading with the seller to drop the price dramatically. By this time, though, they've lost their moment to shine; the chance to make an impact is gone because the price was irrelevant to the current market.
It's not just where you land that matters, but the joy or pain endured to get there.
As you consider selling, keep an eye out for the 'over-promiser'. They're usually easy enough to spot but watch out all the same. Your new pal may be a short term pal if all they’re selling you is false expectations.