Marsha, I’ve found my dream house! Unfortunately, it is currently overpriced by at least $100,000. My agent gave me the current comparable sales for the neighborhood and similar houses. I made a generous offer using her research. The counter-offer I received is ridiculous. Help! How can I make this delusional seller be reasonable?
Short answer: You probably can’t. Your dream house seller needs to come to the realization himself. The good news is that if the owner is serious about selling, he will eventually get the market’s message. Diane Saatchi, senior vice president with Saunders & Associates Real Estate, puts it well concerning real estate delusions: “Why is it the house you no longer want is worth more than market value, while the house you’re dying to have should be had at a discount?”
Delusional sellers overprice their houses for many reasons, not one of which the buying market cares about. I have facetiously said someone should name a real estate company “Cassandra Real Estate.” Like Cassandra in the Greek myth, many times Realtors seem cursed to foretell the future (“It won’t sell for that price”) and not be believed.
A common reason that sellers overprice is that they’ve over-improved their house for the neighborhood. The seller has over-spent and now he just “feels” his house is worth more. The market feels otherwise. The Santa Barbara market right now is fast paced and is quite low in inventory. If a house doesn’t have an offer in two to three weeks, it’s overpriced.
Even if the delusional seller finds a naïve and poorly represented buyer who will pay his price, market forces will step in and correct the situation. The buyer will need a loan. The lenders hire appraisers to protect their interest. The appraiser will call out the over-valued house. Without true comparable sales to substantiate the price, the house won’t appraise and the buyer won’t get the loan. Market forces control true market value.
Then there is the delusional seller who knows more about real estate than anyone else. If he only had ten more minutes in his day, he’d quickly sell the house himself. He’ll hire an experienced agent to represent him and then tell the agent how to do his job. These sellers will go through a cycle of listing the over-priced house with an agent for three months and when the listing expires, drop that agent and relist with another agent. List, expire, drop agent, list, expire, drop agent, over and over again. At some point, if the seller truly wants to sell, he’ll understand what the market is telling him.
You’ve made your offer and received a counteroffer. I would counter the seller’s offer with what you believe is a strong offer. If the seller is not willing to negotiate, then move on to a seller who actually wants to sell and not sabotage his own sale.