Recently, I’ve had to have the rather awkward conversation with my clients around their list price. Believe it or not, it can be an incredibly touchy subject; some project, albeit subconsciously, personal, subjective value upon the objective market value of their property. I suppose that’s just normal, human behaviour. I refer to it as the “emotional surcharge” – the real estate equivalent to the proverbial “beer goggles” where everything looks better than it really is.
It’s like a tax. And nobody likes to pay a tax – especially when you’re not really getting anything extra in return. Which is why it’s so difficult to address the need to drop the asking price of a property listed for sale when it’s not generating any interest.
Cut the cord.
Unfortunately, prospective buyers, who hold absolutely no such emotional attachment to others’ properties (i.e. memories) have no inhibitions when it comes to evaluating competing properties dispassionately and objectively; they are unfettered by any feelings when calculating the merits and worth of prospective properties.
… which is precisely when an effective Realtor will demonstrate their worth; at all times, they will challenge their clients with objective and current market data as a basis for having difficult conversations. Demonstrating honesty and tough love are actually the kindest approach when client expectations diverge from market realities; being able to explain the consequences of a misguided approach or pattern of thought will ultimately save time and costs, particularly if subsequent purchases have already been committed to (and are contingent upon a sale). After all, simply ‘backing out’ of a firm and binding contract to purchase (because you didn’t sell your property in time) isn’t a thing… at least not without the very real prospect of being sued.
What’s going on right now.
Currently, the local residential market is subject to a number of outside forces (well, subject to far more than usual): the highest rates of inflation in a generation, subsequent rising interest rates, a growing conflict in Europe, historically low inventory starting to ease as more housing supply comes on to the spring market and, strangely enough, the psychological phenomenon of buyer fatigue. All these have resulted in homes still selling far above asking (that game is still afoot) but not quite as much over asking as before, nor only in a single day (and especially not for those more expensive properties); a small correction but not insignificant. One can’t help but feel that things may be shifting slightly, if only temporarily.
If it feels like things have changed overnight, it’s usually because they have. While that might be a difficult concept to grasp, I promise it’s a real thing. No point in pretending it isn’t; ignore at your own peril.
In actuality, we saw a similar slow-down of the market last year, albeit 5-6 weeks later in the year than we are seeing unfold at the moment. And we all know what happened with respect to real estate prices since last spring — which is why I’m confident that local residential prices will continue to increase into the late spring and summer season, albeit after a momentary pause. Simply put, unless an incredible amount of new inventory comes onto the market (baring any other unforeseeable shocks), we can reasonably expect prices to climb once again.
So what’s the lesson here?
All this is to say, please listen to your Realtor when they provide you with recommendations with respect to the optimal list pricing for your property. Strategy is important and it needs to be nimble (i.e. responsive to the latest market trends) to remain current and effective. Especially if it’s not what you want to hear; remember, feelings are just another F-word.
… and rarely do F-words ever help people get along, solve their differences or compromise in deal-making.
