Motivating The Unmotivated

Business

5 minute read

September 22, 2011

A few times per year, I have a client who wants to buy a property that has been sitting on the market, unsold, over-priced, for month after month.

I tell them, “I’m good at my job, but not that good…”

You all know what I’m talking about; you’ve all seen that property on your street that’s had a “FOR SALE” sign for eight months, even though most properties sell inside of ten days.

All across the city, all during the year, there are over-priced listings that continue to rot on the market for month after month, but over time, I feel as if we look past these as if they’re not really there.

It happens with condos as well, only it’s not quite as noticeable since there is no sign on the lawn.  But when you browse MLS and you see “Days on Market” has finally topped 200, your head jerks backwards as you say, “Wow,” out loud.

If I’m sending properties to a buyer-client, I don’t send them this “type” of property.  What’s the point?  A seller who has been on the market for six months clearly doesn’t want to sell, and I only send properties to my clients that are actually for sale.

But once in a while, I’ll have a client say, “You know that house on Joseph Street that’s been for sale off-and-on for the last 18 months?  We want to have a serious look at it.”  This is where my job becomes difficult – nay, impossible.

I’ve always maintained that some sellers don’t really want to sell, and somebody who lets their house rot on the market for a year does not want to sell.  The crazy part is, I feel as if that seller really, truly believes that he or she does want to sell!  I can’t get inside somebody’s head, but there must be a tug-of-war going on in the brain.

Or maybe, just maybe, that seller truly believes that his or her $700,000 house is worth $850,000, and will stop at nothing to get it!

Way back when I started in this business, I did an open house for another agent in my office in North Toronto where the seller had listed with his third agent that year.  His house, which was likely worth about $500,000, had been for sale at $625,000 for about six months.  He re-listed with another agent for the same price, and then finally came to my office and listed for under $600,000.

The house continued to sit on the market for month after month, and I felt as if the agent in my office wanted out of the listing just because it made him look bad!  Not knowing the situation, people might assume that it’s the agent that’s unable to sell the house, and not the seller who wants 120% of market value.

The house was eventually listed as low as about $560,000, but was still way, way over-priced.  The listing expired, and the seller took the property off the market.

Months later, the seller (not) suprisingly came back out at $599,000!  It made no sense!  How could the seller re-list higher after being unable to sell months earlier?

As I said before, some sellers don’t have any intentions of selling.  Maybe they’re nuts and they just like the way the sign looks on the lawn…

In this case, I believe it took almost two years for the seller to finally pull the trigger, and he got about $540,000; a far cry from his initial $625,000 asking price, but consider that the market had gone up about 7-8% per year for the two years that he was holding on to the property!

What motivated me to write this blog post today was a couple of clients I have right now, very close personal friends of mine, who are interested in a house downtown that I don’t think is obtainable.

Here is the background…

The house was listed in July of 2010 for $899,000 and sat on the market for two months with no price reduction.

It was then re-listed in September of 2010 for $849,000 – a significant price drop and a real indication that the seller wanted to sell, but, alas, there was a hold-back on offers, and when no buyers materialized (why would they??), the sellers re-listed at $899,000 once again.

The house sat on the market, unsold, at $899,000 for nine months!  Imagine the seller who lets his or her house sit on the market for nine months in the red-hot Toronto market!  Can you honestly tell me that this “seller” wants to sell?

Okay, maybe he “wants” to sell, but does he expect to sell?

The house came back onto the market this summer at $849,000, and remained unsold for two months.

Now, the house is back out at a new price of $829,900.

The problem is: this house is only worth $750,000 or thereabouts.

My client suggested today that it might be worth “low $700’s based on comparables,” and I’m not sure I could disagree.

So how do you motivate this seller?  How can you convince this seller that he or she should look at an offer nearly 20% below the initial asking price?

I’m not convinced you can.

As I said at the onset, “I’m good at my job, but not that good.”

I think there are a lot of sellers out there that will never sell, unless they magically get a price that is unattainable.

We all know that sellers from different backgrounds negotiate differently, and sometimes it’s a cultural issue.  Some cultures don’t believe in selling a property in seven days, as that might seem like they didn’t work hard enough or didn’t receive what they woulda/coulda/shoulda got for the house.

But this house that my clients are interested in will likely never sell at a reasonable price.

It’s a complete dump, and needs about $200,000 worth of work.  This isn’t the type of property that buyers are lined up for, and the only way to produce that lineup would be to list at $699,000 and set an offer date.

As you can see from the prices we’re throwing around, the buyers and sellers for this property aren’t even in the same ballpark.  In fact, they’re not even playing the same sport.

So I ask the rhetorical question again: how can you convince the seller of this $829,000 house that it’s only worth $750,000, at best?

Can you sit down with the seller and show him or her properties that have sold for $750,000 in the area that are of the same size and condition?

Or can you show the seller houses that have sold for $829,000 that are superior in every way?

You likely wouldn’t be granted access to the seller, and if you were, the seller likely wouldn’t listen.

In my experience, this kind of seller says, “You clearly want my house and you’re going to have to pay for it.  You know what I want.  Give it to me.”

That’s when buyers walk away, and the seller says, “They’ll be back, and if they’re not, somebody else will be.”

What the seller doesn’t realize is that nobody is going to pay $829,000 for a house that might be worth as little as $720,000.  Unless that seller leaves the house on the market for two years and we see a 10-15% appreciation in the market, then the house will remain unsold.

As a Realtor, it’s tough to explain to my clients, “There’s no way to get this house for fair market value.”  Some seller are completely unreasonable and they cannot be motivated.

It puts the buyer in the tough spot because they say things like, “It’s not fair.”  Or, “This is ridiculous, he should look at our offer.”

It’s true – he should.  But he won’t, and he never will.

You can’t motivate the unmotivated, no matter how hard you try.

In the words of Homer Simpson, “The moral of the story is: never try.”

Okay, I’m being facetious.  But just know that your efforts, no matter how substantial and no matter how pure, might leave you right where you started in the end.

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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2 Comments

  1. Joe Q.

    at 8:53 am

    Good article. I suspect that, in many cases like these, there is some kind of family conflict going on behind the scenes (between spouses who are conflicted on the value of their home, siblings when trying to sell their parents’ house, etc.)

  2. George

    at 12:13 am

    It’s such an ego thing. Like you said, those sellers have a price in their head, and taking anything less would be admitting defeat…which some people just can’t stomach. They believe they have more control over the situation than they actually do.

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