A client told me about a very interesting survey that has great importance to every seller and buyer of real estate. The survey was in America but its lessons apply to Bonaire and are truly universal.
The survey takers did face to face in depth interviews with sellers through several neighborhoods. In each case the sellers were presented with reams of data depicting the market changes in their neighborhood between 2005 and early 2010.
The sellers were given all the information on every sale in the neighborhood during that time frame. Data from the tax and assessors' offices, title companies, and for profit real estate tracking companies was used. The data was analyzed and presented orally in reports, graphs, charts, and pictures. They made sure the data was presented in a way the seller would understand.
The survey takers answered all of the questions about the data and had a general discussion about the state of the market.
The bottom line of the data was that ALL properties in the neighborhoods had dropped between 30-45% depending on the particular neighborhood. The sellers were then asked only one question. How much do you believe the value of your property has fallen since 2005? They could check off less than 5%, less than 10%, more than 10%?
All of the sellers regardless of neighborhood checked off less than 5% or less than 10%. Not a single seller in the entire survey checked off more than 10% even though the actual drop depending on the neighborhood was 30-45%!!!
Were the sellers listening? Yes. Did they hear what was said? Yes. Did they understand what was said? Yes. The sellers understood everything in an intellectual sense. The sellers just could not accept in an emotional sense the bad news and the consequences of the bad news.
Big bad financial news is just like any other bad news. We hear it and even deal with it and at the same time use defense mechanisms to avoid the full import of the bad news.
Buyers and sellers talk to each other every day. The question really is are they truly listening to each other in a meaningful way that is going to give them what they want, a sale and purchase. In hot markets the buyers have the hearing and acceptance problem and in cold markets the sellers have the problems.
Do you "hear" what is being said in these situations?
The seller says how can I know if my property is priced at the market, when nobody has come to look at my house? I assure you the seller is saying the problem is the marketing program. The seller blames the marketing rather than his or her pricing program. The reality is the buyers are voting with their feet.
The buyer looking at the marketing material does not see enough value connecting the price of the house to the features and benefits of the house. The buyer believes the seller is asking a Rolls Royce price for a much lesser valued car.
The difference between the buyers' perceived value and the sellers' asking value are so great the buyers walk away from the property without any interest in walking through the property. The buyers have voted no with their feet.
The seller says how can I know if my property is priced at market when hardly anyone comes to look at my house. Again, the seller will blame the marketing program rather than his or her pricing program. The reality is the buyers are still voting no with their feet.
A few buyers are interested and when they compare the value offered by the seller compared to the values offered by other sellers they again vote with their feet and walk away. The property's value is attracting some interest and it is also driving real buyers to the competition where they are getting more value.
The sellers say, I don't know what is wrong lots of people come and look at the house and nobody makes an offer. Now the seller just blames the agent for not being able to make a deal. The problem still is the sellers' pricing value policy. The marketing is obviously working. Lots of people come to the house because the marketing is telling them it has the potential for offering good value. When they get to the house they realize the marketing words and pictures do not match the real estate's reality.
Often the prospective buyers actually become upset with the seller and the marketing program because it over promised and under delivered and wasted their time. Once again the sellers' failure to truly listen to the market and price the real estate properly helps a competitors property sell.
The seller says my agent must have underpriced my home because it sold in a week! This is when a good agent should be deaf and not get into a war of words with the seller. After all, the seller did not have to accept the offer of the buyer. Nobody tortured the seller to take the money being offered. What did the seller want? Did the seller really want the property to be unsold for months and months? There are many properties on Bonaire that have been on the market for years, several years!
This is the time for a good agent to say thank you and smile at a job well done.
Each of these scenarios can be turned 180 degrees by describing a hot market and the buyer not hearing how hot the market is. I used a slow market example because the general world- wide real estate situation makes a slow market more relevant.
What is your experience with "hearing" the market?
Art Kleimer is a real estate broker, attorney, builder and developer for 45 years. In October 1994 he and wife Anna were selected as America's outstanding Realtors. He is an educator, lecturer, teacher, trainer, writer, motivator, and consultant to the industry on an international level. An author and recognized expert Art and wife and Anna are dedicated to raising public awareness and industry standards. Art and Anna are the founders of Bonaire Island Real Estate and continue to speak, train and write.
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