by Neil Jenman
READING TIME: Apx 3 minutes
A property was recently sold for $11 million. The buyers were willing to pay $15 million.
This goes on all the time: Sellers seldom realise how much they lose when they sell their homes.
The good news is that you don’t have to do anything, as such, to prevent such a loss. You just have to NOT do something. You must keep a secret. Your secret. A secret that, if the sellers in the above example had kept, would have saved them a massive $4 million.
Most home-sellers (more than 80 per cent) under-sell their homes. Please think about that statement.
If you think these words are meant to alarm you, you’re right. You should be alarmed.
All you need to do is keep one secret. Or, in street-talk, “Keep your mouth shut”.
On average, the difference between the price sellers get and the price they could have got amounts to about ten per cent of the sale price.
Let’s put that more simply: If you sell your home for a million dollars, you should have got $1.1 million. This means, of course, you under-sold by a hundred thousand dollars.
Now, granted, you might be happy with your million dollars. It may be a good price, especially compared with how much you paid. Maybe even compared with how much you expected.
But here is a point few sellers consider: Is the price you get the highest you can get?
In more than 80 per cent of cases, according to my research, the answer is NO.
There are two main reasons sellers under-sell their homes.
The first reason is that their agent is not good at negotiating or worse, is not interested in getting them the best price.
Why should agents try and get the best price? Big price or little price, agents still get a big commission.
An extra hundred thousand dollars is great for you, but if it’s only a couple of thousand dollars to the agent (who is already getting, say $20,000), why bother?
Well, that’s where you come in.
You must make the agents bother about getting you the best possible price.
The second reason sellers under-sell their homes is because they make a massive mistake – they tell agents what they are prepared to accept.
There is a great truth in real estate: If you tell the agent the lowest price you are prepared to accept, that will soon become the highest price you ever get.
In any real estate office, the biggest question agents ask about any home and its owners is this: “WHAT WILL THEY TAKE?”
This is what they all want to know. They all want to know how much work they must do.
Or, better phrased, they all want to know when they can STOP WORKING.
You are about to learn the best statement you can make to any agent who asks you to disclose the lowest price you will accept.
Be careful. Agents may phrase their request in a positive manner, such as: “How much would you be happy with?”
Don’t fall for it. That is the SAME as asking for your lowest price.
So, here is the best statement you can make:
“OUR LOWEST PRICE IS NO ONE’S BUSINESS.”
Stand firm. No matter how many times you have to say it, keep repeating it.
The agents may say, “The buyers need an idea of what you are looking for.”
To which you simply say, “WHY?”
Why does anyone need to know your lowest price?
How can it possibly help you to tell anyone, especially an agent, your lowest price?
The agent’s job is simple: To get you the highest price in today’s market. Knowing your lowest price is not going to help anyone get you a better price.
The time you will most likely get tricked into revealing your lowest price is with what’s called the “counter-offer”.
It will go something like this:
The agent will bring you an offer, say $920,000 when you are asking $1 million.
If you refuse, the agent will ask you for a “counter-offer”.
But please remember, your lowest price is not what you are paying the agent to discover. For goodness’ sake, the agent is supposed to be on your side. The agent is supposed to come to you and say, “This is the final offer. The buyers will not pay a cent more and they have told us that if you get a buyer at any amount above their current offer, you can sell to the other buyer without informing them.”
Please read that paragraph again. Very carefully.
You will know when a buyer has offered their highest price when they do not want to be told if another buyer offers more. Think about it. This is the essence of good negotiation. Most agents are not good negotiators. Hence, the reason sellers lose thousands of dollars.
You must insist that your agent stops hassling you for your lowest price and starts doing what an agent is paid to do – get the buyers to reveal their highest price.
We see it all the time. Just ask anyone who’s bought a home how much they paid and then ask: How much would you have paid? Most will say they would have paid more.
And, in many cases a lot more.
So please keep your secret to yourself. Your lowest price is no one’s business but yours. By revealing your lowest price, you are throwing away thousands of dollars.
It is not greedy to want the best price for your home, it’s basic financial prudence. You wouldn’t sell shares on the stock market below the highest price on the day. Don’t do it with your home.
Never tell anyone the lowest you will accept.
Make sure buyers tell you the highest they will pay.
And if you need help, contact us. We will do all we humanly can to look after you – at no charge and no obligation.
FOOTNOTE: When I speak with agents, I almost always record the conversation (with full disclosure). Recently I had a heated discussion with an agent on this very topic. He had been pressuring the owners to reveal their lowest price. They told him to call me. So, he then pressured me. If you would like to hear the recording of this call (in confidence, for your use only), please contact Alec Jenman on email@example.com. Thank you.
PLEASE NOTE: Our focus is upon helping consumers. Abuse from agents on our web site or Facebook page will be deleted, ignored or well publicised – it depends on our mood.
But one thing will never vary: We will never stop doing what we love most – helping polite and honest consumers get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’ll help you too. Thank you.