Everyone’s heard of home buyer’s remorse. The same phenomena happens with sellers sometimes, too: seller’s remorse. Incredible as it may seem to Silicon Valley home buyers, this can happen even in a strong seller’s market! In fact, the remorse experienced seems to have little to do with the market conditions at that moment.
Seller’s remorse has everything to do with expectations. Seller’s remorse comes from unrealistic expectations. It also comes from agreeing to a list price which is less than what that seller will really accept when offers are presented. Sometimes it’s an “over the cubicle wall” event, when all’s fine until people not involved with the transaction undermine the seller’s confidence by saying “you sold for too little” or “you sold too fast” or other critical comments.
What happens when seller’s remorse makes an appearance?
- The home seller may accept an offer and regret it later, either when still in escrow or after closing.
- It may happen earlier, when one or more offers are presented. If there are multiple offers, at times the seller expected overbids and they don’t go as high as hoped. The seller may want to reject all offers, even though they are above the listed price! Or they may counter the over list price offers higher still, possibly higher than reasonable market value.
- Or it could happen at the very beginning of the process, before any offers are on the table, with an overall regret that they should have sold at some time in the past instead. With this approach, the seller may be miserable no matter how many offers there are or whether or not the price is good at that moment in time.
- Once in awhile, seller’s remorse is delayed until long past close of escrow – perhaps a year or more later – when in retrospect it is clear that appreciation continued and had they waited, they’d have made more money on the sale of the property. (Of course no one has a crystal ball and it is not possible to predict either the bottom or top of the market. If it were, Realtors and real estate economists would only buy and sell houses, condominiums and townhomes at the perfect time. Instead, we are all subject to the same murky indicators of ideal timing.)
Right now, we’re in a period of leveling off or calming down in many parts of Silicon Valley. A few months ago, there were huge numbers of bids and wild overbids. Now there are fewer offers and smaller overbids. But the sellers today read the news reports from a few months ago…and they are set up for disappointment if they don’t get good info on what’s happening now, and more importantly, if they do not accept it.
It is critical to know that the real estate market in the San Jose area is changing constantly. By the time something is reported in the news, it’s a month or two or three old. If you want “real time” information, you have got to talk with people who are involved in listings, sales, offers, or those talking with them now – not later, when it hits the news.
How to avoid a case of seller’s remorse? The best thing you can do, as a seller, is to get and absorb the current market conditions so that your decision to sell your beloved home is done with eyes wide open. Accept the reality of the market conditions today as they are, not as you wish they were. Work with a good real estate agent who can assist you with the realty statistics and to understand the implications on your particular property.
Approach pricing honestly and realistically. The biggest marketing mistake that tends to be made is overpricing, the unrealistic price that is not going to happen. (Some Realtors will take a listing at any price, so do not think that just because it’s listed at a particular number that it is viable.) Do not list your home only where you “wish” it would sell or you may well end up selling for less than what it should be worth as it goes from overpriced to overpriced and stale in a few weeks’ time.
And do not under-price your home as part of a scheme to get dozens of offers and sell at a geyser high price. If you are too low, you could end up only with home buyers who can afford at that price. Even if it gets bid up a little, it may not be to the price point you really want. Grossly under-pricing is also inherently dishonest if you have no intention of accepting the list price.
Real estate professionals: seller’s remorse is a miserable experience for your clients, and you will find the experience to be contagious in terms of misery. When home sellers feel that they’ve made a giant mistake, sometimes their listing agent looks to be at fault as someone who should have done something differently: suggested a higher list price, negotiated harder with the buyer’s agent, helped them chose a different time for marketing or any number of things. One of the biggest challenges can be folks you neither see nor hear directly who spread doubt, confusion, or cynicism to your clients. You cannot negotiate or educate these people since you are never in direct contact with them. The best defense is to proactively give your clients good, strong data that will enable them to be educated. That way, they are prepared to correct any misinformation that comes their way. It may not always prevent seller’s remorse, but it will be an enormous help.