Negotiating the Sale – It Doesn’t Matter What the Seller Paid

As a successful agent, you already know that a home is worth what someone is willing to pay for it.  Sometimes what a home buyer pays makes no sense because the high price can’t be justified. More often, home buyers like to factor into their pricing what a seller is making on a home. Buyers are notorious for believing they can get a better price for a home if the seller paid a lot less for the home. If you allow your buyers to apply this strategy, they could miss out on a purchasing a home that is perfect for them. When you’re in this situation with a buyer, get them to consider the reverse situation.

“If the seller had inherited the home and now wants to sell it, are they supposed to agree to sell at half price because their parents gave them the home?”

You can also make the point by asking the following:

“What if the seller had paid too much for the home when they bought it?  Would you be willing to compensate them for their bad timing? Of course not!”

Another good way to handle the, “I want to get a better deal, because the seller paid less” strategy, is to use examples that apply to other products that make the point. For example, when a buyer, or an agent representing a buyer, brings up the subject of what the seller paid for the home in negotiations, you could also use the following:

“You used to be able to buy Apple stock for $5.00 a share. Does that mean the original buyers should sell it for less than its worth?”

The answer is obvious. People sell products for what their worth unless they’re desperate and really need the money. You could also use a third party cautionary tale to make your point as soon as you know the seller could be making a lot of money, but before the objection arises.

“It never ceases to amaze me how some people don’t apply logic to a situation. For example, we had a buyer we were helping find the perfect home a few months ago, and he wanted to focus on the price the seller had paid two years ago. The seller had purchased the home from a bank a year earlier at a really great price.  Our buyer didn’t think the seller should make all that money in such a short amount of time, so instead of focusing on the true value of the home, he was more concerned on how much profit the seller was making. He put in a low offer and lost the home to another buyer. He ended up buying another home that was his second choice. It’s too bad! His family will never enjoy the home he bought as much as they would have the one they lost, and he knows it!”