This is a post about the “psychology of the seller”. I will do a follow-up on the “psychology of the buyer”.
Buyers always want to know how much a seller will take. Will they come down off their asking price? How much will they come down? I answer questions like this almost every day.
Here is how it goes..
- The seller thinks his house is worth more than he is asking for it.
When a seller puts a price on a house it’s almost always for less than he really wants. His Realtor probably showed him comparable houses to convince him that if he really wants to sell it needs to be a lower price. So at the beginning of the listing period the seller is not moving off his price much if at all. in fact, the seller secretly hopes there will be a feeding frenzy for his house as soon as it comes on the market. At night the seller lays in bed imagining that buyers will pay thousands of dollars more than the list price for his home. This sometimes does happen, but it indicates an extreme sellers market or that the house was under-priced.
2. If it doesn’t sell it’s the Realtor’s fault, it has nothing to do with his price.
Barring an under-priced house or a runaway sellers market the house will be exposed to the market for some time. After a couple weeks the seller is wondering when the house will sell. If the house is shown more than twice a week it will encourage him to keep his price where it is. This is where differentiation begins between sellers. Some will begin feeling the pain in two weeks, for some it will take 8 weeks. Even though the seller told their Realtor before the house was listed, “you know, we really don’t have to sell, we will just wait until we can get our price”, they start getting antsy at some point.
3. The seller is not very negotiable at first.
Anytime prior to 30 days on the market a buyer should expect to pay full price or close to full price for the house. Most sellers are still hanging on to their price in their minds and if you want the house…buy it.
4. After 60 days, the seller starts to become negotiable.
But some houses stay on the market longer than 4 weeks. This is where a buyer needs to make a judgement call. Most likely the seller will not come down much below their asking price even after 4 weeks. Even a an offer of 5% lower than the asking price will seem like a low-ball offer to a seller. But after 4 weeks on the market if the seller has not lowered their price yet this would be a good place to start.
Generally the seller lowers the price at some point. Usually after 60 days on the market or so the seller will make a reduction in price. Then the whole things starts over again.
5. If the seller hasn’t lowered his price after 60 days, he may never lower it.
The seller may not be able to lower his price without having to pay to sell his house. In that case he may decide to either keep it or give it to the bank. Or perhaps he really isn’t motivated at all. He will sell for his price or not at all. By this time he may not every lower his price and it may be one of the houses that come off the market at the end of the year without every finding a buyer.