“I can’t afford to drop my price because I’m moving to a more expensive area!”
Whether you are an agent or a house seller, the chances are you will have either come across this phrase or, used it yourself. It’s a situation that can happen to anyone in any market and for those on the outside of the dilemma, the flawed logic of the statement is easy to see; your home isn’t going to sell for more just because you need a higher price for it, any more than my Ford Fiesta is going to sell for more than its book price because I want/ need a Mercedes estate.
Often, the ‘need’ to move to the more expensive area/ type of property isn’t really a need at all. Certainly, the need to move may well be genuine but there are often cheaper areas within commuting distance of the perceived ‘must-have’ address that may be equally suitable if not having quite the same cachet (see my blog on ‘The agent keeps sending me the wrong property details’). There are also many people who downsize to release capital/ reduce debt but still believe that they will be able to live in an identical/ similar home and area they currently live in at the end of the exercise.
However, once someone has trapped themselves in the vicious circle of flawed logic, it can be very hard to rescue them and it is not a simple matter of lack of education or intelligence; in fact, quite the opposite. Usually, in my experience, it seems that the more intelligent or educated someone is, the more likely they are to get psychologically hamstrung by this phenomena. Quite possibly this is to do with the pressures of maintaining a certain perceived social standing and moving from being a large fish in a small pond to being rather smaller fry in a lake.
So how to overcome it? As an agent, I have found the best way is to Establish
- the urgency and actual need of the move (do they actually HAVE to move (job/ health reasons etc)
- if the move is THAT location/ property type specific (is there any flexibility)
- the timescale (when must the move be completed by; will the person’s health deteriorate if the situation goes on and on)
- the REAL budget. (How much extra are they prepared to spend/ how much money do they need to realise to cut the debt etc)
Once that information has been discovered and confirmed*, you need to do some very simple maths. The key to solving this conundrum is focussing on the areas of flexibility and price difference NOT the asking and selling prices of the two properties. E.g. Mr A has £30,000 extra to spend on top of what he sells for/ Mr A needs to clear £30,000 off his mortgage by moving.
By looking at the price difference between the two properties, it makes it easier to look at making and taking sensible offers. Very often, people trapped in this situation believe that the prices of property where they are moving to are non-negotiable; so don’t even try to see whether local sellers might take lower offers by asking around in local agents or, using house price data that is now available. Consequently, they become even more entrenched in the own selling price position. Another problem is one that I alluded to earlier, which is the attachment to a certain style of living and an inability to see that it is not always possible to have everything we want; sometimes compromises must be made, whether this be on price, location or condition of a property.
By speaking to agents in the area you/ the customer is moving too, you can often establish just how flexible sellers really are in a given location and, whether there are any comparable areas nearby which might be more affordable which are ‘on-the-up’, and so a good, or possibly even better, investment.
*say it back to the customer and obtain agreement that those are the facts or; if you are the person stuck in this trap, say it out loud – even if no-one else is there; doing so makes it ‘real’ in your mind and helps break the mental block.
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About Chris Wood: Chris is an estate agent with over 25 years of property experience. His business, PDQ Estates Ltd is based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards for estate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on Klout LinkedIn Ecademy Facebook and Twitter he lives in Penzance. In his spare time; Chris likes to keep fit and is a former member of the Territorial Army. In 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.