By Monte Mohr
If you are a home buyer in today's market, let me congratulate you on choosing a great time to buy! The market is showing continued signs of recovery, yet prices are still reasonable and interest rates are still relatively low. So why, in this growing economy, would some home sellers reject fair market offers on their home? The answer is quite simple - it's what we in the real estate business refer to as "imagined equity."
Real estate brokers see this sort of thing happen all the time. It takes a while to convince people that their homes are not worth what they had hoped, or in many cases a home isn't even worth what the owner originally paid. But now that sellers feel like it is "safe to get back in the water," some are still holding onto the idea that the market value of their home has instantly recovered.
When a home is overpriced, despite overwhelming evidence, most sellers simply need their home to spend time on the market to prove that reality. There is no other way a seller will embrace that truth without going through the process.
Buyers' agents can even use comparable sales data to justify a fair market offer, but sellers who are not motivated enough to embrace the reality of today's market will not accept the data as sufficient. As a broker I have seen sellers take the time to drive past the each comp that was used and then contest the comparisons.
But the reality for these types of sellers is that unless they are lucky enough to find a cash buyer, thus avoiding the appraisal process, they will be forced to reconcile with comparable values if they truly want to sell their home. I have seen numerous occasions where appraisers could not find comps to justify the sales price. In such cases, the appraisal comes in lower than the sales price and ultimately the sales price must be reduced.
Most sellers require greater motivation in the form of a life-changing event - such as a divorce, job relocation, a growing family - to help them accept the true market value of their home. In addition, some sellers' agents are not very good "tour guides" when helping their sellers price their property. A seller's agent should have no problems producing the comps they used when determining the price of a home, yet there are those who always seem to be too busy to produce that information.
Unfortunately, the only way for buyers to overcome these issues is to either pay more than today's fair market value, or wait for the seller to accept reality. I have a saying I use regularly ... time has a way of healing our stubbornness. Eventually sellers will realize that the value in "getting on with life" exceeds the value of the dollars they are trying to realize from the sale of their home.
Monte Mohr has sold more than 2,500 homes, making him one of America's top Realtors for the last 25 years. This experience has given him a unique perspective on the Nashville real estate market where he can be found at www.tennesseedreamhomes.com. He is also a regular contributor of real estate information to Nashville's NBC affiliate station, WSMV Channel 4. To learn more about Monte Mohr's experience as a real estate agent, to get free advice about your biggest real estate challenges or to request an interview, contact him at Info@TennesseeDreamHomes.com.