Not surprisingly, most homeowners believe the value of their property is much higher than what their home is worth. This perception created a conundrum for agents because agents recognize that taking the listing at a higher price could mean countless hours and money spent on a listing that would never sell. In recent years, it also meant the seller would likely see an even greater decrease in prices by the time the home did sell. In other words, by not listening to the agent, the seller would lose an additional 5%, 10% or even more in value. We referred to this situation as the seller “chasing the market down.”

 

The good news for most areas of the country is that prices have begun to stabilize, and in some cases, even recover.  The shift in market conditions has actually created a great opportunity to extend the listing term when the listing agreement is signed. We call this the Palm Beach Strategy because during the height of the housing bubble it was common for agents in Palm Beach to accept over-priced listings if the seller was willing to list for a period that was long enough to let the property appreciate in value. The argument was, if the property was listed for 20% more than it was worth, annual appreciation would allow the selling price of the home to “catch up” to the asking price.

 

The Palm Beach Asking Price Strategy was very effective psychologically because sellers would recognize that holding out for a higher price would impact the time it would take to sell a listing. Each month the seller could weigh the benefits of holding out for a higher price against the impact waiting to sell was having on their quality of life.

 

With most experts predicting a rebound in housing prices, it’s time for agents to take advantage of price appreciation to get their sellers to commit to a  longer listing period. Consider the following approach:

 

“Mr. and Mrs. Seller, It makes sense for you to get the highest possible price for your home. Although we recognize that it’s beneficial to sell your home when it’s first placed on the market, you could consider listing for more than the price that may be justified right now, if we allow for a longer period to sell your home. We certainly don’t want your home to get “stale” by being listed for too long a period. But, we can weigh that risk against the benefits of letting the value in the market  “catch up” to the price you’re asking for your home.”

 

By pointing out the risk of letting the home sit on the market for a long period without selling, you are preparing the seller to agree to lower the price if the property doesn’t sell.