Why can an owner's emotions destroy a real estate sale?

Private owners who want to part with a house or apartment often make many mistakes. When it pays to hire a real estate agent and how to do without.

The children inherit a condominium, but do not want to live in it or become owners. Grandma and Grandpa become dependents and need to be placed in a nursing home. Couples separate and have to sell their house. The husband dies and the house becomes too big. Or the owners simply see a good opportunity to get rid of a cheaply rented property - who knows if property prices will continue to rise in the future?

Either way, there can be many reasons for selling a property. And currently, more and more owners are considering selling their property. The supply of properties for sale has already increased by 30%, as a comparison between the second quarter of 2021 and the second quarter of 2022 of the real estate portal atHome shows.

In contrast, requests to buy properties have fallen across Luxembourg in the space of a year, with one linked to the other: "The marketing of properties for sale is becoming more complex due to the fall in demand, which is why more properties are once again being offered on the open market" Nextimmo reports.

But what is the best way to sell a property? And what are the possible mistakes? First of all, there is usually one question: with or without a real estate agent? Many private sellers may think: "I can do well without, I do not have to pay thousands of euros in commission." But there are good counter-arguments. Private sellers often underestimate their own feelings. Rudolphe Aben says that.

Owners tend to think their property is more valuable than it actually is

Such owners see their property as a jewel that may objectively be more of an old, worn-out box, overlooking defects such as a lack of roof insulation that any outsider would notice immediately. Economists talk about the property effect. This states that everything that belongs to the owner has a higher value than what belongs to others.

"It's psychologically difficult to distance yourself from this and put yourself in the role of a potential buyer from the outside, so to speak," explains Rudolphe Aben.

It is best to hire a real estate agent: he knows what prices can be achieved where, can recognize defects and, in the best case, can put himself in the position of the buyer and the seller as a "competent diplomat." However, if the sale is organized privately, the statements of potential buyers can be offensive to the seller. One may find oneself unsympathetic - and already the sale becomes more difficult or even impossible because emotions come into play.

"It's also very difficult to negotiate on your own behalf, especially if you don't do it all the time," explains Rudolphe Aben.

In the end, therefore, it can be worthwhile to hire a broker - because they achieve such a good sales result that the commission paid by the seller (which is then often secretly added to the sales price) is recouped by the higher sales price.

Rudolphe Aben warns private sellers who prefer to try their luck on their own, without an agent, against one mistake in particular: relying on property appraisals, available for free or for a small fee, to find the right price.

"These appraisals are not worth a shot of powder," he said. They are merely a "marketing gimmick to get addresses of owners willing to sell." They are merely statistical values from databases, which have no meaning in rural areas because of the small number of cases, and in large cities "provide a false figure because they are calculated on the basis of asking prices."

However, these are usually 15-25% higher than the achievable prices. In addition, the results depend, among other things, on what the owners enter and how they assess, for example, the building condition or the need for modernization. This leads to misjudgements, as private individuals "always see their property more beautiful". It is better to have a market value appraisal prepared by a real estate valuation expert.

This costs between 650 and 1500 EUR, but the price also depends on the property. However, Rudolphe Aben stresses that a market value determined in this way is only an important indication and that the price depends on the market situation. "It is the buyer who determines the price," he says.

The inspection:

Rudolphe Aben advises thinking in advance about when and how best to present the property. If you schedule appointments so that potential buyers follow each other around and see each other, you're only fueling competition. This may cause potential buyers to make up their minds more quickly.

The expert advises to be patient. It can take a few months for a property to sell. You should also not be too disappointed if the first meetings are unsuccessful. This may be because the ad has attracted two groups that are not really buyers: "the seers" who are curious and consider property viewing a hobby. And the perpetually undecided. This group yearns for a dream home or apartment at a bargain price. But both together prove to be a mirage," warns Rudolphe Aben.

Pricing:

The expert recommends to consider before, which realistic minimum price one would like to obtain after deduction of possible concessions in each case. On this price one can add about ten per cent, in order to have a negotiating range. Buyers are often satisfied if they manage to reduce the price by as much as five percent of the asking price. Rudolphe Aben warned against making too high an offer. "Overpricing is the most common reason for the failure of proposed private sales," he said. If the seller has to lower the asking price because the property has been unsuccessfully advertised for months, it is considered "burned." It then becomes even more difficult to sell at a reasonable price.

The price threshold:

Private buyers often have a round limit themselves. Example: a property must not cost more than EUR 600,000. Rudolphe Aben advises to set the price below such price thresholds, e.g. at EUR 598,000. "A little price psychology can often work wonders," he says.

The price talk:

Selling an apartment or house from private to private is ultimately a matter of trust. "The more credible and trustworthy you appear to your potential buyers, the greater your chances of selling," says Rudolphe Aben, who warns against typical rookie mistakes, such as constantly talking to potential buyers, forcefully praising the property or making the buyer feel that you need the money from the sale urgently and quickly.

"It's better to let the potential buyer talk about his impressions first," advises the expert. Nevertheless, sellers are, of course, obliged to inform potential buyers about the main defects and hidden faults or about a community of owners with fierce conflicts.

Sellers should always provide an answer to the question "Why are you selling?". When price negotiations start in concrete, you should know the prices of similar properties in the area to be able to argue. It is also helpful for sellers to always be aware of one principle: "A property is only worth as much as someone is willing to pay for it".