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How Can You Get Owners to Sell at Realistic Prices?

By Jim Gillespie | August 11, 2008

One of the most frequent questions I get asked from brokers nowadays is “How can I get owners to sell at realistic prices?” And when I hear this question it oftentimes comes from a broker who’s never worked in a slow real estate market before.

When the market was really hot in many areas, owners could ask unrealistic prices and eventually get them. A broker could take a listing that was 10-20% overpriced and during the listing period the appreciation would finally catch up with the asking price. Someone would end up paying the asking price, and in the process the buyer, seller, and broker would all be very happy. But we’re in a different market in most areas right now. Owners still want more than fair market value for their properties, but there’s no appreciation around to catch up with their pricing demands anymore. And a lot of brokers are just left scratching their heads.

Unless you’re still in a market that’s experiencing solid appreciation, overpriced properties aren’t moving. But there are many brokers who experienced years of solid appreciation in their markets and were selling properties very easily, and now many of them are just feeling confused. But now we’re dealing with different times, and we can’t utilize those wonder years as our benchmark for what our real estate market is going to be like right now.

In today’s market, where appreciation will simply not catch up with the unrealistic asking prices of owners, true sellers of properties are selling because they have a bona fide reason to sell. A reason outside of simply “only if you can get me this (ridiculous) price.”

These bona fide reasons for owners to sell can include:

1) Wanting to trade into another property

2) Being tired of managing a particular property and wanting to trade into a property requiring less management

3) Needing or desiring cash and wanting to sell just to take the money and run

4) The dissolution of a marriage or a business partnership

5) Estate planning

6) Needing a larger or a different building for their business

7) Feeling that they’d better sell now before their property loses more value and their equity erodes

So an owner who will only sell if they can get what you as a broker believe to be an unrealistic price, is not a real seller in today’s market. But they were real sellers when the market was constantly catching up to their unrealistic pricing demands. But those days are gone now.

A real seller in today’s market is someone who has a genuine underlying reason to sell, and they’re going to sell their property for whatever the best price is that they can get for it in today’s market. With this in mind, here are some questions you can ask property owners to determine if they’re really sellers in today’s market:

1) “What’s the reason you’re interested in selling your property?”

If their only reason for selling is because they want to get an unrealistic price, then they’re not real sellers in today’s market.

2) “I feel that your property is worth “X”. If it turns out that “X” is the highest price that a buyer will pay you for your property in today’s market, will you sell it for “X”?

This question can give you more insight into whether or not the owner has a real underlying desire to sell their property outside of price alone.

3) “What will happen if you don’t sell your property right now and you continue to hold onto it for several more years?”

This is referred to as future pacing, taking them out into the future in their own life and envisioning what life will be like if they still own the property in the future. If they answer with something similar to “It doesn’t matter to me. If I don’t get my price I’ll just hold onto the property for another 5-10 years,” you may want to immediately run to your car, leave some skid marks, and hurry back to the office.

If they instead answer the question with, “That wouldn’t work. We have to sell the property within the next several months,” that could be a very good sign for you.

The truth of the matter is that right now that there are fewer transactions closing in the majority of the commercial real estate marketplaces nationwide as compared with one or two years ago. So you need to be closing a higher percentage of the transactions going down in your market right now just to make the same amount of money that you did one or two years ago. With this in mind you have to be utilizing your time more effectively, and you may want to begin by refusing to work with owners who want unrealistic prices for their properties. They’re not real sellers, and they’ll just drain both time and energy from you that could be much better spent finding the sellers who really want to sell.

I have an upcoming teleconference titled “Becoming a Master at Getting Exclusive Listings”. Click here if this is a subject that interests you.

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