Sellers: Beware the Magic Number of Price

I have had two situations recently where a "magic number" of price was not met so the sellers wouldn't sell. And in both instances, the offers submitted were not that far off the "magic number" original price. In fact, they were both right around 95% of the original price...and in this "slow" market!! What are these sellers thinking?

OK, one was a For Sale By Owner, so he had no Realtor offering professional advice or market analysis. In this FSBO situation, the owner puts a sign in his yard and is asking $107,000 for his house. An investor looks at the house and offers him $102,000 cash. The seller says no. He wants the "magic" $107,000 or no deal. The investor keeps his phone number and calls him from time to time because he sees the for sale sign still in the yard. The seller continues to say no. After over six months, the seller lists with a Realtor and is asking $108,000 now. I don't know what the commission is on that listing, but I'm sure it's more than $1,000. So in the end, the seller will not net as much as if he had come off his "magic number" and sold to the investor for $102,000 cash.

In the second situation, potential buyers liked the property and made a low offer, trying to get the best deal they could. The seller countered this offer coming off the price only a few thousand dollars. Then the buyers made another counteroffer quite a bit higher than their original offer. The seller said they would not go any lower than $135,000. Original list price was $139,900. The buyers offered $133,000, only $2,000 less than the seller's last amount. The seller would not budge. Negotiations broke down over a 1% difference!

I guess these sellers were not truly interested in selling their properties. They had offers on the table that were 95% of the original listing prices and still could not come to an agreement. I was involved in one of the offers and reminded the seller of the current market conditions as evidenced on the market analysis I had completed. I also reminded the seller that we were about to enter the winter season, which is typically slower in any market. But to no avail. Anyway, the point of this post is to make sure that sellers see the overall net amount of each offer and not hold onto any "magic number" that they think they need to have for a Sales Price.