5 Easy Seller Objections to Overcome
If you are going to meet a seller you will inevitably hear objections to the first price you offer. You can be as little as $1,000.00 off the seller’s asking price and the seller will still look to get you to the asking price. It is in our human nature to try to look out for our best interest so do not get upset. All you simply have to do is prepare for the most common objections and get the seller to agree with you.
Here are the objections I run into the most and how I have been able to successfully overcome them.
- Your offer is too low. Usually before I make an offer I try to have them tell me their asking price. Once in a blue moon their asking price is what you can pay. Usually, however, the price is higher. Naturally, when I make the offer the seller’s response is that my offer is too low. If they have not given me a price I ask for it again. From this point you have to be good at math or pull out a calculator and explain the offer to the seller. Show the seller the closing cost, carrying cost, renovation expense, possible unknowns specific to their home, closing cost on the back end, agent commissions, marketing expenses, etc. I actually show sellers what I plan to make on their home and what it breaks down to in months and weeks. In most cases, they see I’m not trying to get rich off one house and realize my offer is a fair offer.
- I rather fix it myself and make the profit. This objection is handled the same as objection #1 but now I add the additional cost that they will incur. For instance, they are not in the business of investing in real estate so they will pay market prices for the renovation. Which contractors are they going to use? Will the contractor actually show up and do the work? If the work is complete, will the craftsmanship be good enough? Remind them that, while all these expenses are being made, the mortgage and utilities still need to be paid. Inform then that if they are still occupying the home the renovation will take longer, which will eat into their “profit”.
- I spoke with a few agents and they said I can get much more. Because I am a broker and have access to MLS I will prepare a CMA before the appointment and show them that the other agent is wrong or giving a higher sales price in order to get the listing. I also point out that commissions, closing cost, escrow fees, title policy, HOA transfer fees, etc. still need to be taken into consideration. We do this when we offer to pay for closing costs and do not collect a commission on the transaction. I also explain that as agents we cannot guarantee the home will sell for the asking price. My offer, on the other hand, is guaranteed as long as nothing crazy shows up on the inspection report. In addition, the agent cannot tell the seller when the home will sell. If I cannot convince the seller to accept my offer I will offer to list the home for a specific amount of time. If, within that time, it does not sell I will purchase it without a commission for an agreed price. Make sure to place a deadline on this so you are not waiting forever. I made this mistake once.
- The tax appraisal office has my house appraised at this amount. When this happens, I immediately ask if they have ever protested their tax value. Especially ask if you know there are signs of gentrification in the neighborhood. I would say that more that 80% of the time the answer is NO. This allows me to go on to the local tax appraisal website and show the seller how the tax value of homes in the area are all over the place. I have the advantage of pulling up rentals I own or lease for my clients in the area to show how by protesting we decreased our tax value. This demonstrates to the seller that the tax value is not an indication of a home’s true value, especially if the tax value was allowed to increase year over year without protest.
- The home only needs paint and maybe carpet. This is my favorite. For this I simply pull up the recent sold homes in the neighborhood and show the seller the pictures of those homes. More importantly I show the seller the sold prices. During the process I point out the obvious to make sure they understand their home needs a lot of work in order to sell anywhere near the price they had in mind.
While overcoming these and any other objections, be sure to remain respectful and keep in mind that this home could have sentimental value to the seller. The last thing you want to do is offend the seller and lose out on purchasing the home. By sticking to the facts the seller will see you are a professional and the original offer he/she considered offensive will become reasonable. In the end a win-win scenario can be reached so everyone walks away with a smile.