The reality of selling residential real estate comes down to the difference between “could” and “probably” as it pertains to a property’s value. Anything could happen, but what will probably happen?
In 17 years of full-time residential real estate sales, my estimate would be that three out of four sellers spend 90 percent of their time focused on what their home “could” sell for and little time considering what it will “probably” sell for. The size of problem this mindset creates is based on the difference between their “could” sell-for price and the “probably” will-sell-for price. The larger the gap between these two amounts, in most cases, the longer a property will be on the market and the lower the final sales price will be.
This preconceived notion of “could” value that many sellers experience can be compounded by the working realities of the real estate industry itself. One of the most common forms of compensation for licensed real estate salespeople is commission. The sales-person’s income is zero unless he or she sells a property for or to a client. For agents, telling potential seller clients that their views of their own home’s value are likely incorrect can make it challenging to secure clients, earn commissions and pay their bills. So, when it comes to determining a property’s “probable” value, the seller may not want to hear it and the agent may not want to say it. This commonly leads to significant problems.
The blunt reality of the situation is what the seller and his or her agent thinks the value should be is relatively insignificant. For a sale to be successfully completed, only the buyers’ views matter. If the seller is the highest bidder on their property, they get to keep it.
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The sale or purchase of a property will be, in most cases, the largest financial transaction of a person’s life. Common sense would dictate that it be managed as such, like a business transaction. Though, unlike other assets a person may have — bank accounts, stocks, bonds, retirement accounts — you don’t sleep, eat and raise your family in your 401(k). This physical and emotional attachment can lead to illogical decision-making and unrealistic expectations.
What defines success in a residential real estate transaction? There are literally hundreds of details that must be coordinated and managed to complete a successful transaction — many of the details are the responsibility of the other party in the transaction or one of the many service providers needed to complete a transaction (lenders, appraisers, inspectors, underwriters, attorneys etc.). That said, and accepting that few transactions are without bumps and detours, if the property sells within a time frame and price range that meets the clients’ realistic goals, success has been achieved.