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Seller Mythunderstandings
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Rich and Jess explore common myths in real estate, debunking misconceptions about timing, pricing, offers, and cash deals. This episode provides valuable insights for sellers and agents to navigate the market more effectively.
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And we're back with the Living You podcast with Rich and Jess. And we recently bumped into some content that we thought would be cool to cover, which basically is some myth understandings about real estate, what sellers think, what buyers think, um, that questions that they bring to us that make us realize either how little real estate people actually do in their lives, one to two sales a year, um, and how much their neighbor or their uncle or their buddy influences them in a way uh to make them believe things that probably are not exactly true. So we wanted to cover some of those topics for you.
SPEAKER_01100%, Jess. Isn't real estate one of those things that everyone has it's like one of those topics that people just like to talk about, but then the more you randomly enter entertain those concepts in in everyday life, you're like, ooh, but is that what people think? Because that's not how it works. Um, we decided to jump into some of these myths. And I don't know if you coined myth understanding, but I thought it was clever and we'll go with it.
SPEAKER_00I will definitely not take credit and then also take credit, I guess. No. Yes.
SPEAKER_01We actually have a couple lists, but I think the ones we want to focus on right now are some seller-based conceptual myths. And I have a list, I'll I'll um read off a couple of these. So, Jess, we often hear spring is the only good time to sell, or spring is the best time to list a property. And I wanted to see your thoughts on is that a myth? Is that true, or or is it somewhere in between?
SPEAKER_00I think it's not as black and white. Um, I think, you know, we do market Monday and we kind of look at things, and and I and funny enough, we we looked at something recently that we learned that January actually doesn't look like a very good time. But other than that, the best time, um, the best answer I've ever been able to give is really the best time is when you're ready. There are always serious buyers out um at any point in the year because everyone's, you know, needs are different. They need to move at different times in their lives. So if you're out there and you're priced well and you're doing all the things, really whenever you're ready is ultimately the best time. Um the bulk of people believe that the best time is the spring. So the bulk of people come out in the spring. I think it's just the belief that has actually shaped the market more than the market is sort of shaping um shaping it itself. I think what you know, what we believe we've brought into existence. Also, your houses probably look really nice in the spring too. So I think there is there's definitely a layer of it's gonna show better in warmer months when there's flowers and you know the trees are beautiful and there's grass. So I think things tend to feel like they just look better anyway. Um so it could lean towards truth, but also I think you can still very much sell something in the dead of winter if it's priced well, because there's always gonna be people out.
SPEAKER_01That's a perfect answer. I couldn't I couldn't disagree with any of it. Um just to add on my little thoughts on it. Yeah, I think I think you're right. If done, if executed properly, the the the house should should sell or should compel buying interest no matter what. Um even in the the brownish uh post-winter spring you know, grass all the way to the the pre-winter post-fall foliage, uh drab, brown trees and stuff like that, they'll all sell if you do it right. But having said that, there are certain again, we are in an uh upstate New York, we're in a seasonal market, we have actual four seasons. So there are times of year where yes, the media does look a little better, you know, outside, but again, it's really about if you're talking about residential properties, then it's the house that sells, it's the it's the inside photography that sells, it's the the way you write the the copy, the words, the description, it's how it feels. And and if you and if you price it right, buyers will feel pretty pretty good because it feels like a deal. Um but uh but there isn't really any any discernible like buyers are more serious in the spring. I uh not really at all. Um the real buyers that are out there are always looking because their life is changing and they're ready to act when when the time is right for them. So I think I think you're right. I think it's not a a hundred percent myth, but there's a I think it's a self-fulfilling prophecy in a way where if agents tell people, hey, wait till the spring, uh, because it's too cold and I don't want to be outside in the snow, and sellers are also like, eh, I don't want to really shovel my sidewalk or whatever, then guess what? We all wait. But that doesn't mean it's the right thing or it's any quote unquote better, in my opinion.
SPEAKER_00No, because it there's something to be said to be the one that steps out early. And we did have a listing earlier this year that was marketed well. It kind of checked all the boxes for people, like it was, you know, this this gem that came on in January, right? Or was it early February? It was weird and everybody wanted to buy this house. So, um, and I think it got people out looking early. Um, it didn't matter. We could have listed that in July, we could have listed that in March, we could have listed that at any point. It was just sort of what everybody wanted and it was priced well. Um, and it was very unique to the market because it wasn't competing with anything else. So there's also if you can, if you can have a strategy around, again, your marketing, your pricing, and be in a lower inventory market, your house is selling faster than if it's lumped in with a hundred other listings or two hundred other listings that just came out.
SPEAKER_01Yep. Okay. I love that. Myth number two, and this is one of your favorite topics to discuss. Uh, if we price high, is it? We can always come down.
SPEAKER_00Right.
SPEAKER_01And possibly also we'll we'll intertwine the second and the third because they're similar. Overpricing leaves room for negotiation. So let's talk about listing high and then uh talking it down, negotiating down. Is that a strong policy? Is that the right thing to do? What's your what are your thoughts on that?
SPEAKER_00What I would do is I would have people look at it from the other side. If you're trying to sell your house and someone comes in with a very low offer because they know that you're just gonna bid them up. Most of the time when a seller gets a super low ball offer, they're actually insulted and they're like, forget this guy, he's not serious. So what do you think the buyer thinks if you're priced really high? Forget this guy, he's not serious. He's not gonna bring it down to market where it should be. A seller has to remember that what we talk about a lot is, you know, your house is exists in the context of the entire economy. When we talk about affordability, I know that you need, you know, an extra 200,000 because you're building a house in Georgia. Our market here, your house, that doesn't matter. What you need to do in your life doesn't matter. So I think, you know, you can only really get what the house is worth in the market that it's in with the buyer pool that you have. So it's important to sort of differentiate, you know, what the house can actually bring you, what the market will actually bear, and what you actually need might be very, very different. So so the short answer is pricing high could actually be very detrimental because you're not going to get activity the longer your house is on the market. What do buyers think? What would you think is a buyer of something's wrong with that house or the seller's unrealistic? So try to look at it from the other side. Think about you're stepping on the market with your like, think about a house as like general inventory, right? You're marketing an inventory. So imagine you were selling a car, or imagine you were selling lemonade. You know, you want to market it, you want to make sure there's a good price. You want to know your audience, know your customer before you step out. And I feel like selling a house is the only time people don't look at the data. They actually do not look at the consumer and market it to the consumer. Instead, they go, Well, this is what I need for this product. Well, those products sit on the shelf. And we don't want that. As agents, we actually want to help you. If selling is what you really actually want to do, we want to help you do that.
SPEAKER_01Yes, I concur on this one as well. Um, I think at some point it comes down to hopefully the property owner, the seller, trusts their agent to be professional, to guide them with a pricing strategy that makes sense. Now, there might be context and times when if a seller is under no real pressure to sell and the agent understands that and they're okay listing a property and knowing that it might not sell right away at a higher price. You know, I I in some ways I support that if everyone understands the playing field there and everyone's okay with it. To some degree, the listing agent will still get some marketing credibility, they'll still get some inquiries, they'll still get some traction on it. And if the seller is okay with being patient and having their property sit for three months, six months, whatever it is, hey, that's their decision. But I think fundamentally, when we uh put a house on the market, it's because we want to sell it, not have it sit for six months. So if your intent is to actually move the property, trust your agent, trust their pricing strategy, and list it at the market. Now we talk about different things. Can you go, you know, drop it below the market a tiny bit and compel people to fight? That's a different story. But overpricing just for the sake of my uncle down the road told me that in North Carolina houses are selling for this, therefore it's worth this. That that stuff does not work. That's just not logical. Like like you said, think about other products. I don't I don't shop for jeans and look at the the price of jeans in Paris and compare that to the jeans I'm gonna buy at, you know, my local store. So I I don't know if that makes any sense. And I don't even shop for jeans.
SPEAKER_00But I get mine at BJ's. Like I bought jeans today for $16.99 because the price was right and they look like they fit my butt. Yeah. So people are being very practical about their house as well. They just are like, does this fit my needs? And is this something in my price range? So understanding as well that things are less affordable year over year. So if you're talking to somebody that sold a house 20 years ago, 30 years ago, it is not the same. Oh, we always priced higher then because we could always negotiate down. If you're telling me what someone did 30 years ago post-COVID, it broke the system. Okay, and we talked about this the other day on Market Monday. COVID literally broke the system. If you have not done real estate business at all, bought or sold since 2020, then you don't know at all what's going on out here. And I say that with love. You do have to trust your professional and at least ask more questions. At least, you know, and we've said this before, suss your agent out that they really have been selling a lot, you know, and ask questions. What's the, you know, percentage to list price that people are getting? That's a huge number that we look at. Like if it's 92%, I know I'm getting pushing a little bit more into like real estate language, but this is why as a seller, you need to know who the consumer is, who the buyer is, and what they're facing. Because they're not just looking at the price of your home, they're looking at all the affordability. And your home has to make sense. And if it doesn't make sense, it doesn't sell.
SPEAKER_01The second part of that was I kind of put two together, but overpricing lean leaves room for negotiation. Um, did we I mean I we kind of addressed that.
SPEAKER_00I mean overpricing just means you're gonna get less activity, you're gonna get lower offers, and if you're gonna come down then. Because here's what happens. Just come down.
SPEAKER_01We work with buyers, right? We know when a buyer sees a price and they think, well, I'm seeing the value here as significantly below, they're actually hesitant to make an offer that they think is the right market value because they feel they like you said before, they're actually afraid they might insult, quote unquote, the seller. But behind the curtain, the seller's like, Well, I'm actually super stupidly overpriced because I expect to negotiate down. So it's like, why play the game? Just price it so that a buyer is gonna feel confident with their offer, not like tiptoeing around, well, I think it's worth X, you think it's worth 2X. Like, where's the reality?
SPEAKER_00So that's a really good point, though, because not only are they not gonna make the offer because they're afraid you're not gonna come down, they don't know that. Because if you put that in the listing, I'm overpriced, I'm happy to come down, just make an offer. Don't do that. But not only are they not gonna make an offer because they're afraid you won't come down, they may not even come see the property. So now you've actually turned your buyer away by pricing it too high.
SPEAKER_01So multiple reasons why just kind of Yeah, don't do that.
SPEAKER_00Please don't do that. Overpricing. Unless you don't want to sell.
SPEAKER_01Right. Like everything is negotiable, but that doesn't mean we should force a broad negotiation chasm. You know what I mean? Like, let's let's start on the same page of the book, not like front and back.
SPEAKER_00Right, exactly. Yeah, and then again, there is, and you only kind of skirted past it, but there is the you know, the strategy that really does work most of the time. Let's go just undermarket and create activity. It doesn't mean you have to create a horrible bidding war that's painful for everybody, no, but you do want to have multiple offer interests. You do. You want people calling, you want to have three showings this week, you know, or five showings this week, and you want to have at least two of those people bidding on it. So you have to be priced in that way, and then there's a possibility you can get a little bit more than the market we thought we could bear. So instead of chasing it down and lowering the price, we might be able to negotiate it up. You I you I believe that you always get more by pricing it well or just below. That's just my belief and my experience.
SPEAKER_01Yep. And so our next one is actually along the same lines, but it's a little different. So we'll go with the first offer is always lowball. Uh I actually don't even love the term lowball, but I I think it's in my lexicon. But the f so the the concept that the first offer is always gonna be like a like a shot across the bow, some kind of aggressive, I'm gonna barter you down. What is what do you think about that?
SPEAKER_00I have actually never had that experience. Usually the first offer is the highest offer.
SPEAKER_01And what happens is I get different experiences, but but that's okay. Go ahead.
SPEAKER_00Yeah. So well, the in the experience I've had, and and probably in the other market more so than anything. It's usually the best offer you're gonna get because, again, it's been priced right if you've listed with me. It's been priced right, it's been marketed wonderfully, and I'm wonderful to work with. So people call and they come and show it and they and they see it and they love it. They want to put their best put forward, best foot forward because they actually want the house. So I have not had the experience where the early offers are low because buyers realize, hey, this is the first offer, and if I want it, because you have to think like the buyer, let me put in a compelling offer that I can get this thing off the market. Because the last thing I want is the open house to happen on Sunday. The last thing I want is the seller to keep showing. So actually, I've found it's it's usually one of the stronger offers that come out early.
SPEAKER_01Yeah, I think that makes a lot of sense. I think that's probably more likely to be the case, especially if we start from that starting point of we didn't overprice, we we priced it fairly, you know, intelligently. Then what you've done is you've compelled all the active buyers to say, that's a pretty solid deal. That's one I should get serious about. They see it, they like it, they're like, I'm ready to act because they priced it right, they marketed it well, it looks good, things like ready, you know, and then they're gonna make an appropriate offer. Uh, I will say I also sell a lot of land, and I know most of the time we talk about houses, but in the land market, it is different. It's very common for an initial offer to be somewhat obnoxiously low. Um as long as you can keep your seller to be like, yeah, people, people try to get something on a deal, right? But um it's a kind of a different game, but oftentimes you'll start almost like 50% of the list price, and then you're kind of on like really, but they're just trying to see if they can make it work, and then you come back uh at like 80% of asking price, and they're like, Yeah, you know what, we'll do it. So I mean, sometimes those those big chasms with land can can shrink very rapidly because they're just trying to see, like they'll see what you what will you take. Um, but a house is a little different because there's usually more equity there, there's there's usually more complications, there's usually more comps uh to make it more more verifiable. But anyway, a land is fun because you um you get lots of different scenarios. But yeah, first offer is definitely not always lowball. And even I'll give a small anecdote. Uh I had a listing recently that w was unfortunately, you know, on the market for longer than I was this listing agent, right? These are my sellers. It sat on the market for longer than hoped. And we didn't really move the list price. I know you have a whole different concept on this, Jess. That's a whole different conversation, but we hadn't really done a lot of reduction. Um, but then we had a good showing, and they were buyers who had just happened to be in the moment where they they were they were ready to do something, and they made a really strong offer. And so even though it had like days on market, didn't look great, and all the stuff might have like all the you know, you know, all the the the the normative things seemed a little like uh the I would expect a lower offer. They made a pretty strong offer. Negotiation was short and sweet, signed a contract, and and it's off and running. So again, that was that case of a buyer, it made sense for that buyer, right? So sometimes this is a little bit of a tangent, but sometimes I don't want to say you should eschew the the advice, but sometimes that patience does pay off because there is always going to end, almost always going to end up being a buyer that just feels good in your property and it's worth it to them. But if you're gonna play the averages, it's still it's still better to price it uh uh attractively and bring all the all the eyes onto it.
SPEAKER_00Right. And I and part of this myth understanding is you know, like we said, seller could easily just think the buyer is not serious. So I wanna I wanna just speak to that. Like I don't know that I've had a buyer that makes an offer with money and a pre-approval like in their hand and is not serious about buying something. So they are serious, there's just other factors around that, but I think that's an easy thing for a seller to say, like, oh, they're just not serious, and they can dismiss an offer that may feel low to them because they could be overpriced. Um, so it's it's important to kind of just be aware of that too. Like, I I don't know that I've ever had someone not serious. Um, whether or not this is the property for them is irrelevant, right? Well, not irrelevant, but that's the factor. Um they are serious if they've if they're making an offer. I mean, they do realize that if it gets accepted and we go to contract and all those things that they they do have to buy it.
SPEAKER_01So yeah, that's a that's actually a really good point. Yeah, this is a big decision, it's a big deal, and it's not like you know, maybe once in a blue moon it'll happen, but I don't often work with buyers, I shouldn't say ever, but buyers make one offer on one property, right? And then if it doesn't work, they move on. But it's not like you're uh I saw seven houses today, let's write seven offers and see what happens. Like that's not typically, at least that's not how I would advise it to work. Um, so it's it's not as flippant as that. And every offer, even though it might be low or lower than you hope, that doesn't mean it's not serious. The buyer might not have a great grasp on value. Their agent might not be guiding them with a great grasp on value, and that's a different story. But serious, they're they're trying to buy a house.
SPEAKER_00Yeah, and I and some people have the instinct not even to counter. And that's okay too. That's a seller choice. But if you already know you are a little bit overpriced, just just counter them because that counter might be just what they're waiting for to go, okay. You know what? That number does make more sense, and I will come up to that. You just you just never know, and everyone has a different strategy. Um, so I think it's important to play ball. The first offer, I think was the point, is at the low ball. I think it's important to play ball and just see where it goes. You don't have to accept it, you don't have to sell it to them, but we can explore the offer further.
SPEAKER_01All right, Jess, let's wrap out wrap up our five, our first five seller myths with cash buyers are always better. I mean cash, cash, cash. Cash sounds.
SPEAKER_00Cash is king. Cash is king. That's what they say. Um, and at the closing table, it's all cash. Um, you're gonna get a check anyway. It's all cash. It's it might take a little longer to get there. There might be some more steps between now and then. Um, I think it just depends on the property. I think it depends on your timeline. Sure, cash will speed things up. Um, cash will alleviate, you know, if there's an appraisal um worry. So, sure, in some cases, cash might be better for that specific property. Is it better across the board? No, not necessarily because cash also wants a deal. So you might be able to get cash. Cash wants a deal. Um, if you want more for your property, you're gonna want someone to finance that because they're patient, they're willing, they'll pay a little bit more. They're only coming 20% out of their pocket, right? The bank is paying 80% of it, so they can pay a little bit more, actually. Um, cash wants a deal. So it really depends. I think it's case by case. I I think this definitely is a myth understanding that cash is king because it's it's very unique to to the deal that we're in.
SPEAKER_01Yep. Again, I like that. It there's uh there's always like you have to, as a seller, you have to understand your risk tolerance. So uh the more complicated the offer, the more potential ways it could fall apart, right? So we're talking about uh If it's a if it's a mortgage, you have an appraisal. It's gotta meet a valuation by a third party. Uh the bank has to protect their asset. If there's inspections, you've got to worry about what happens if the inspection doesn't go well. So sometimes oftentimes the conventional wisdom is, yeah, if you reduce those potential variables of falling apart, good for you. But the people that are going to reduce those variables often understand that there's value in reducing the variables, and so they're going to offer you less. If it's cash with no inspection and no appraisal, guess what? You're almost paying a cost for that reduction of the uncertainty.
SPEAKER_00Yes.
SPEAKER_01Some people love that. And some sellers will say, I'll take cash all day long, even if it's a few extra few fewer dollars because it's safer. Makes some sense. But if you are confident in your pricing, if you're confident in where that valuation is, then there's no reason to really be afraid of a mortgage or an appraisal or you know. If you know your property well and you're confident that you've maintained it and you know a lot about it, then the inspection might not be that concerning either.
SPEAKER_00Um cash doesn't mean yeah, cash doesn't necessarily mean that's the same thing.
SPEAKER_01Correct, correct.
SPEAKER_00Yeah, cash could still come with that heavy inspection contingency, and that deal can still fall apart just as m gloriously as any other.
SPEAKER_01That's 100% true. I was I was just trying to talk about the the variables involved, but yes. And but you're right. At the end of the day, when you go to the closing table, you're gonna get a check. Whether that check came from a bank account, a 401k, uh, or a lender's, you know, bank, it doesn't really matter. You're still gonna get that same exact dollar amount.
SPEAKER_00So I'm also super more confident I I'm actually more confident in a lender bringing the the funding to the closing table than a human. Like there's that too. Like I've actually had people say cash and not have the cash. The other thing is um just kind of talking about it. Obviously, yeah, that's a good point.
SPEAKER_01I mean, if we can just for a second.
SPEAKER_00Yeah.
SPEAKER_01So that's again, that's why you know, reviewing offers with your your seller client, it's important to for someone to bring proof of the ability to purchase. And and I mean, we have to be a little careful with fair housing and whatnot. But I mean, if you if you just see a a a statement from some financial institution with a name and some numbers that that m sound good, but I don't know that there's cash in that. Not all accounts are the same. Is it a lic is it truly liquid? You know, there's lots of things that get locked up financially that we're not financial advisors, we're not attorneys, so we can't really get too deep into that. You know, I'm not gonna advise a seller to go accept a cash offer on like some Bitcoin or something. I don't even know if it's fully legitimate currency. I I mean maybe it is, but you know what I mean? Like there are sketchier, there are sketchier cash and less sketchy cash. I've yet to see someone bring an actual briefcase. I've heard stories about that, you know, but I've but I've yet to actually see someone in.
SPEAKER_00I mean, actually, had someone try to do that. Bundles. They can't. Well, the seller wouldn't accept it. The seller's like, what am I supposed to do with this briefcase? I'm supposed to bring this to my bank. And it was a this moment of like, wow, like bringing actual physical cash is a problem. What are you gonna do with that cash? You're gonna go and walk to the bank now and put that in? Like he was horrified. He was like, No, I would never do that. Either it's gonna be from a bank or it's gonna be, you know, wired to me from an account. Like, all that makes it that much more legit. I think the legitimacy of the deal, it's nice to have an institution involved just because you know it's actually gonna happen. It's one other one other thing on uh Yeah.
SPEAKER_01Like what if you got just say 100K little sale for cash? Like someone brought 100 grand in cash. Can I just walk to a bank? Can I just walk up to my bank and say, here's a hundred grand cash? I just wanted to buy. I mean, I'm sure they would, I guess, but I've never really thought about it.
SPEAKER_00You're gonna report it to the IRS's income.
SPEAKER_01I mean, yeah.
SPEAKER_00Yeah, it's just it's gonna be it's gonna be messy. If anyone listening has ever brought $100,000 in cash or more to a bank or to a closing table, um, please let us know because we definitely want to talk about that. Because I I had someone try. Yeah, I've had someone try, uh, obviously in Queens, um, and it was a it was a no-go. Um, but what one more point on this uh in terms of cash. Um, one thing that we've seen too, if the you can get through the inspection, that's not an issue. They're worried about whether or not it's going to appraise. What a seller could miss that you need a good agent for is the heavy down payment. So, for example, when we talk about the 80% loan to value, they're doing conventional, they're only putting 20% down. That's where we get, okay, now it has to appraise for that contract price. But if you have somebody with 30, 40, 50% down payment, that's as good as cash. So don't ignore the heavier down payment. And maybe that's a negotiation tool where you can go back to the buyer and say, listen, we want to accept your offer. We are a little bit worried about appraisal. And the buyer knows that. The buyer's not in the dark that it could be overpriced, right? They're bidding on something that they know for whatever reason, maybe a little over. You can ask them for a heavier down payment because I'll tell you a bank will end on that all day long. If it's a 70% or a 60% loan to value, they know that they have equity, they have they have enough ownership in that home now. So don't overlook a heavy down payment as well. If it can't be all cash, take the one that's over 20% and you'll you'll close that loan.
SPEAKER_01Yes, I actually agree there. It's almost as much of a slam dunk, if not even better, like you said, because it is a vetted financial right, because you know it'll be funded on closing day.
SPEAKER_00I would prefer that all day.
SPEAKER_01That discussion of some some myth understandings that uh that sellers have in their mind as they as they ponder their they're selling their prop their home or their property. Um Jess, this was a nice little session on on myths. Let's uh Yeah.
SPEAKER_00And I hope it was helpful. Did you want to go into buyers or did you want to wrap this one up and do that another day?
SPEAKER_01No, let's wrap this. No, let's well, are you asking me like legitimately off mic? Um, I think we should end up.
SPEAKER_00No, on mic. I think we're on mic, and then we'll end the recording. Then we'll end the recording. But let's have a nice outro then.
SPEAKER_01Or no, that's what I was trying to get to.
SPEAKER_00I love this. This leave all of this in because this is this is two boneheads in real estate trying to have a podcast and we're figuring it out, and we love this.
SPEAKER_01But if you guys have any feedback for us, for our our buyer myths coming to an episode soon.
SPEAKER_00See, we're gonna learn how to do all these things. But honestly, we hope that that was helpful um to you. And if there's any myth understandings you have, you should try to get in contact with us. I don't know how you contact us, but you should contact us and we will talk through all your myth understandings as well.
SPEAKER_01Links in bio, like, follow, subscribe, uh, message, DM all the things. Facebook, Instagram, YouTube, all the stuff that exists. Link to that. That's right.
SPEAKER_00We we might be easy to find. I can't find us, but you might be able to.
SPEAKER_01But you should. All right, Jess, as always, thank you, and we will catch you guys next time.
SPEAKER_00Sounds good.