In the olden days, most real estate negotiations started from a significant deficit of trust.
The buyer and his agent would enter into the transaction deeply distrustful of the validity of the asking price.
Top three assumptions about the listing price from the buyer’s perspective:
- The asking price has no basis in reality;
- The seller’s trying to pull one over on me;
- The seller thinks I’m stupid.
Top three assumptions about the listing price from the seller’s perspective:
- I should get more than my neighbor’s asking price;
- The buyer’s going to try haggle me down so I’m jacking up the listing price;
- The buyer doesn’t have a clue about the fundamental value of the home.
The objective of a real estate negotiation is to find a win-win solution that brings together a willing buyer and a willing seller. This is easier to achieve when both parties start off from a basis of trust and mutual respect.
X-ValueTM has solved the problem of distrust in real estate negotiations by providing an unbiased, factual basis in which to start the negotiation. Now, instead of debating the facts, the parties to the negotiation can make a rational and civil case for why the transacted price should be above or below the X-Value.
The conversation might go something like this:
Seller agent: “Yes, my client acknowledges the comparables in the X-Value point to a $1 million valuation. But, we have priced the home at $1.1 million because of the home’s excellent interior. As you can see, the kitchen appliances are new and of the highest quality. The floors are new and there is not a single scratch…”
Buyer agent: “Yes, I see you have a point. However, while my client’s willing to pay something for the excellent condition of the home, the market is down and there are a number of comparable homes for sale. Therefore, we are looking for a discount off your asking price that is closer to the X-Value.”
The X-Value ensures that there is a more civilized negotiation by giving agents the tools to manage their clients’ expectations from the beginning and establish a realistic view of the fundamental value of the home in question.
As following table illustrates, X-Value works to find a common ground between the buyer and the seller regardless of the market condition.
Although X-Value is based on recent past transactions, some of which can be only a few days old, you and your agent should take into account the market and the condition of the home when negotiating.
For example, as the above table points out, in a down market, there is downward pressure on the X-Value.
As a result, the buyer is right to expect to purchase the home at or below X-Value. If you are the seller and want to sell it for more than the X-Value, then it is your agent's job to justify the premium. If he or she cannot, don't expect someone to agree to purchase your home above X-Value unless they have a reason for overpaying.
When both sides approach a transaction from a basis of facts, trust is automatic and it is infinitely easier to negotiate the right home at the right price.