The tricks used to drive your price down
Conditioning is one of the real estate industry’s favourite tricks used to get home sellers to lower their price expectations. If you are aware of it happening, you can protect yourself against it. But if you don’t realise that you are being conditioned, you can make decisions that you come to regret.
What is conditioning? It’s when the agent praises your home prior to listing and then continually points out the negatives after it is on the market.
In order to distance themselves from the negativity of conditioning, the agents may frame it in the buyer’s words. Phrases such as “buyers like the house but the road is too busy” or “the buyers keep telling us the bedrooms are too small”
Agents that praise your home prior to listing and then continually point out the negatives after it is listed are conditioning you.
When you hear negatives about your home once or twice, you can brush it off. However, after 2 or 3 months on the market, the conditioning begins to have an impact.
One homeowner described it this way, “the agent made me feel as though I would not be able to give the house away.”
In a rising market, conditioning is not as common as it is in a flat or falling market. Even if the home seller has an inflated opinion of value, the rising market will catch up with the seller’s price expectation. In a falling market, the gap between price expectation
and the market reality grows wider.
“If the agent lies to the buyers, why wouldn’t they lie to the seller?”
Another commonly used tactic to condition sellers is the “low offer” trick. This usually happens a few days prior to an auction. As taught behind closed doors, the low offer trick is designed to “soften the seller up” for auction day. A seller that wants $550,000 is given
an offer of $420,000 days before the auction. It is not that the agent thinks $420,000 will be accepted, they are just looking to set the seller up to accept the “market price” on auction day.
Market price? “But $550,000 is what the agent told us we could expect to sell for”.
Yes, the agent told you that it would sell for $550,000 and they then went out and told buyers that bidding would start around $400,000. So if the agent lied to the buyers, why wouldn’t they lie to the seller? So many home sellers overlook this point when they see
their agent promoting the property to hopeful buyers at a price the sellers would not accept.
Conditioning helps the agent avoid blame for the property selling for less than they originally quoted to the owner.
Conspiracy or Tactic
You may be inclined to ask yourself if conditioning is really just feedback and not a deliberate process to drive the sellers price expectation down.
The difference between conditioning and feedback comes down to 2 main points.
The first is whether the agent’s thoughts and sentiment toward your property has changed before and after you signed up. The second comes down to the agent’s intent. Are they continually passing on negative feedback about your property to lower the price or do you genuinely have a fundamental flaw that buyers cannot overlook?
The Real Estate Institute has previously been quoted in a training manual stating that “auction is the fastest and best conditioning method”.
A real estate/auctioneer trainer whom is well known in the industry commonly tells agents in his courses that, “conditioning is not
a dirty word”.
Conditioning has been in the agents bag of tricks for as long as houses have been bought and sold. The market is gyrating at present. It is incredibly unpredictable. Unpredictable to the degree that every report, commentator and expert seemingly contradicts the other.
If you are selling at the moment, stay focussed on this objective – What is the best price that the genuine & qualified buyers in the marketplace are currently prepared to pay for
your home? It is the agent’s job to answer this question and then it is your decision whether you will sell or keep your property.
A favourite conditioning trap is filling your home with lookers & neighbours which is then disguised as market feedback. Who cares
what the neighbours think your property is worth? Be careful about accepting non-buyers feedback as market intelligence.
When selling, ask your agent for honest and direct feedback only from genuine, qualified buyers. If you like the offers that come in, sell your home, if not, withdraw from the market and wait for better selling conditions.
You have worked hard for your home, so don’t have some agent verbally run it down so they can get a quick sale commission for
Protect yourself against conditioning – only sign a short-term agency agreement. If your agent is conditioning you, fire them!
Article written by Peter O’Malley. For a free copy of Peter O’Malleys latest book “Real Estate Uncovered” please contact us.