How do you tell someone their price is too high?

Question

The thing that bothers me most about investing in RE is that people have no idea or they don't care that their price is not competitive.

I meet people who have had their homes or properties listed for months, some almost half a year, and they refuse to drop the price!!

I just want to scream "how are you asking this much when your neighbors are selling 10-30% below your asking price, are you out of your gourd?"

Now I get that some are underwater on their financing, those aren't the people I am talking about. And how does someone think 5-9% is an acceptable cap rate in a C or D property type???

Any tips, scripts, or advice when dealing with these people?

Engelo Rumora · Answer

hahaha

Just submit super "low ball" offers and have thick skin for their responses.

I remember sellers laughing and verbally abusing me for my low ball offers only to call me a few months later to ask if my offer was still on the table.

Gotta love real estate haha

Thanks

Ron Carlson · Answer

On the open market (mls) its different because people have a security guard called a Realtor.  When face to face with a seller the game changes. Just be honest. Say. If you house was fully fixed up it would be worth this. However its not. So I need to put in $xxx amount. And I have closing cost and realtor fees and holding cost and insurance, and seller concessions, and title policy.

Write down all the number and back them them. So take your estimate ARV (after repair value) tell them how much it will cost you really to sell the property at that price. Than tell them your not a charity and you have a family to feed so you can't risk all this money and not make a property. Tell them that its not worth you buying the house unless you can make $X (what ever profit you think you need to make.)

I use this strategy all the time. Once I put it into prospective of the true cost the are more willing to except my offer. Just be real and honest. It goes a long ways.

Dawn Anastasi · Answer

If it's an owner occupant, they are very emotionally attached to their home.  I did a rehab in a property and was hoping for it to be appraised at $120,000 which it did for a 4 bedroom home that was newly renovated with a modern look.  The house next door was 3 bedrooms and the owner said she was going to wait a couple years and then sell for $180,000.

I walked through the house and it was like going back in time to the 60s or 70s.  Green shag carpeting, wallpaper everywhere, you name it.  There was no way in heck it would sell for that much.  I tried to politely tell her this, but she insisted that they had just put in new cabinets about 10 years ago and had a screened in back porch, and they just put on a new roof, etc. and of course it would sell for that much.  I gave up.  Let her think what she'll think.

Jean Bolger · Answer

I was looking at the financials for one multi unit- it became obvious that it was WAY overpriced. I asked my broker to call the seller's agent and see if they would negotiate down. The agent pretty much admitted that the guy didn't WANT to sell, he just had it listed to appease his wife, who wanted him to get out of the biz :)

Jimmy Klein · Answer

As others mentioned, while these people list properties on the market, they are in no rush and could care less. Don't get emotional about it, let them do as they wish and make an offer your comfortable with. If they say No, go somewhere else.

Scott E. · Answer

Those that are priced way above their neighbors are probably in no rush to sell. They have a price in mind, and when they can sell for that price, they'll leave. I know some people locally who are following this logic(They don't have their houses listed though!)

As others have suggested, just give your offer. If it's not accepted or countered, no big deal! On to the next one...

Vanessa Brown · Answer

I'v'e found some people have extenuating circumstances for some of their prices. If it's too high all you can do is give it a shot and then let it ride.

Bill Gulley · Answer

"Well, I think the tax assessor would agree with your asking price" how did you arrive at that?

Ignore asking prices, offer your deal. :)

Justin B. · Answer

Thanks for the responses my morning rant...

Duncan Taylor · Answer

Keep emotion out of it. Make your offers based on your analysis and your goals.

If they aren't reasonable or motivated you certainly aren't going to win them over by trying to explain why they are wrong.

That is their listing agent's job.

How do you tell someone their price is too high?

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