Blanche Evans is a writer/editor and CEO of evansEmedia. Formerly, she was a senior editor with Realty Times, where she was named by REALTOR® Magazine as one of the most influential people in the real estate industry.
The Want-to-Sell vs. The Have-to-Sell Seller
Find out sellers' motivations to determine how best to service them to get the deal done.
May 1, 2004
Determining the motivation of your seller is critical to your marketing strategy, but it’s also important in helping you control your business workflow better. You need to know whether or not you’re going to have a sale and what you are going to have to do to make it happen.
The reason is that sellers are different and they have different motivations that will help determine price, days on market, and other variables that impact the closing and your take-home pay.
While it’s simplistic and doesn’t meet every seller scenario, most sellers fall into two categories—they have to sell or they want to sell. Either seller poses significant challenges, which is one of the reasons you’re so handsomely paid to complete a transaction. It’s your job to handle their individual circumstances and personalities appropriately so that you can navigate the transaction to closing.
But don’t think sellers should make it easy for you. You are being hired to make it easy for them.
Urgency can sometimes make for a reasonable seller, but sometimes being reasonable is simply out of a seller’s control.
The Have-to-Sell Sellers
Sellers with their backs against the wall may be there for a variety of reasons. Having to sell means that there is an element of urgency or even desperation that is beyond their current control.
With a have-to-sell seller, you can expect a lot of volatility. For example, a couple may be getting divorced, for which selling the house is the only way to equitably divide assets. But what if one doesn’t really want the divorce? That person could disagree, delay, and damage the sale until it fails to close. At the least, you may grow more gray hair until it closes as you negotiate between two warring spouses to get the deal done.
A person in a bankruptcy situation may not have the funds to make the home ready to sell, which means you may be marketing a home in less-than-perfect condition. The market tends to heavily punish homes that aren’t move-in ready, and your seller may be surprised that what the home will fetch may not even clear his or her mortgage or other debts. Your job then is to find out what your seller has against the house to see if it is even feasible to sell, then you can offer your services accordingly, but be prepared to go the extra mile—even to the point of asking the bank to take less money to clear the lien so the home can close.
Transfers are another matter. These sellers are motivated, but they also pose challenges. Some may be upside-down in their homes. They may have purchased with zero or low downpayments, or they may not have been in their homes long enough to build enough equity to pay your fee or their closing costs. You may be working with a third-party asset manager who may require additional paperwork and reports while getting a hefty 30 percent to 35 percent referral fee.
Other have-to-sell sellers aren’t in a financial bind but may have unique problems that have to be approached with sensitivity. The death of a spouse, the seller’s health, or another kind of loss could have taken the joy out of owning and operating the home. You’ll be relied upon for your problem-solving skills, but also for your compassion as the seller goes through a difficult period. You may have to deal with some emotional volatility or physical unavailability, or even a family member with power-of-attorney.
Your job is to find out why the seller wants to sell so that you can help him or her not only price the home correctly for the market, tempered by the seller’s motivations. But you also have to make it clear that it isn’t the buyer’s job to save the financial day. With an emotional seller, you may have to cushion them from the harsh scrutiny of buyers by bringing the bad news yourself that certain things simply have to be fixed before you can properly market the home—or market it for the price you believe it could fetch if the repairs were made.
The Want-to-Sell Sellers
You can expect to have a much larger pool of want-to-sell sellers at almost any time than have-to-sell sellers. Think of the large number of baby boomers, for example, that are reaching the empty-nest stage and may want to scale down their responsibilities or move up to more luxurious digs. Think of the move-up buyers who want a larger home. They are fine where they are, but they want to show they’ve arrived with a larger home and better schools for their kids.
Desperation and urgency are usually missing from the want-to-sell seller because selling is an option. The other option is staying where they are.
The risk with the want-to-sell seller is that he or she may not really be motivated enough to sell. The seller may want to test the real estate market to see how they will make out. If it looks like they could make out well, they will think about where they would like to go. You can handle this kind of seller easily by finding out where the seller intends to move and what kind of lifestyle he or she would like to have.
In other words, with the want-to-sell seller, you have to determine if the seller is using you to test the market or if there are some very real goals at the other end of the rainbow. For example, the empty-nest couple already may have a deposit on a builder townhouse that won’t be ready for nine months. They can sell their home in the meanwhile, store their belongings, and travel or rent until the new place is ready to move in. With nine months until moving day, they are not in a have-to-sell position. They can take longer to get the house ready or test the market with a higher price.
Your job is to keep that market test reasonable. You don’t want to be stuck marketing an overpriced home for months simply because the seller has time to wait it out.
What You Can Do
Urgency is important to consider, but when it is accompanied by desperation, then you have a different set of circumstances to deal with that will be case-specific. Be ready to work with your broker on creative solutions to help the desperate seller.
However, lack of urgency, as with the want-to-sell seller also can be a problem. Urgency comes into play the closer you can get the seller to declare a moving goal and that moving goal date looms closer and closer. One way to do that is to help the seller with appropriate moving solutions.
For a seller that is testing the market but is unsure about where to move, be willing to show the seller a few housing options and communities that match how the seller tells you he or she wants to live. Find out where the seller likes to vacation and why. If he or she wants to move away, offer to refer them to an associate in areas where relatives live. The sooner the seller has a place where he or she wants to live, the sooner you have the urgency you need to make the sale happen—and possibly a referral to boot.
Don’t be afraid to ask qualifying questions. This is your time you’re giving away, and you have every right to know the score, even if the seller isn’t so sure. If you aren’t certain what the seller wants or needs, ask. “If it came between time and money, which is more important to you—a quick sale or netting the most you can from the proceeds?” If netting from the proceeds is the most important, introduce urgency by finding out if there is a dream home the seller wants. If the seller has an unreasonable goal for the proceeds, such as using the sale of the home to retire on, and won’t compromise in the face of market conditions and comparables, then you can make your own decision about whether or not to spend your time.
Remember that sellers are giving you inventory, but that doesn’t come without a price. Plan for sellers to be difficult, and you’ll have solutions in place when they are. They’ll be impressed, and you’ll have an easier time getting them to closing.
(c) Copyright 2004 Realty Times. Reprinted with permission.
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