During your home search, you’ve likely come across homes that are priced ridiculously high. I see it quite frequently, perhaps now more than ever. It continues to be a seller’s market and when my buyers come across one of these over-priced listings, they often assume that the sellers have become greedy and are trying to get a very high price for their home. I have a different theory altogether.
There are real estate agents that will tell sellers what they want to hear: their house is worth more than they think. They often do so with one purpose in mind - to put their For Sale sign on the front lawn. In real estate agent “speak” this is called “buying the listing”. A For Sale sign is great advertising for the real estate agent, and an effective way to promote their name. It also shows their clients that they are busy and active.
Ultimately having a For Sale sign on the front lawn for 3 or 4 months makes the agent look bad and brings negativity to the seller. I personally think this is a terrible way to do business. Stringing along a seller and giving them false hope is not a way to build a business in my opinion.
When I meet with prospective sellers, I always give them a range of what I think the house is worth based on current market conditions, not based on their needs or what they want to hear. While I am always sympathetic to everyone’s financial situation, I will give the sellers a realistic price for what the home will sell for, even if they don’t like what I am saying. I also find it equally important to give an honest assessment of what work needs to be completed to make the house more marketable to buyers. I might offer to show you other homes for sale that a potential buyer will look at in your price range to show you how your home should be priced.
Going back to the original question – why should you as a buyer try to avoid these sellers? Firstly, they have unrealistic expectations for the true value of their home and in fact these sellers may not truly be a seller and simply testing the market – which it makes it difficult for them accept an offer at the market value.