I recently completed a real estate transaction with my buying clients with a private seller. I didn’t go looking for trouble. My clients found this house buried deep in the internet on a private home selling site that I’d never heard of. The private sellers were on Kijiji too, but that is another site where I never think to go. Last time I was on Kijiji, I was selling ice skates not real property.
Honestly, I was hoping that my clients would not like the house, but they did like it and we had to put in an offer.
(I’m complaining now.)
The problem with private sellers is not that they are amateurs who do not know what they are doing. The problem is is that they do not communicate effectively. I’ve said many times that real estate (all sales for that matter) is a communication business. They don’t ask for help or even accept it when offered. They don’t know what to do or what to say so they wait for direction and then consider whether or not they should take it. It’s analysis paralysis. Direct questions, if answered at all are answered with “I have to think about it”, “I don’t know”, or “I have to talk to my lawyer first”.
Delay, delay, delay.
It is frustrating. But it makes sense. I get it. I do this all the time, help people buy and sell homes. Realtors are professionals. We know how things are suppose to go. Private sellers are amateurs. Private sellers have put an ad up on Kijiji and now have to deal with a complex transaction. They are poor swimmers out in deep water and it looks like a storm is coming up.
It is unfair for me to fault them for their inability to carry out the process smoothly. It would be like telling me to take over coaching a professional football team. I’ve seen football. I’ve thrown a football, but imagine how well the Miami Dolphins would do this year if I were their coach.
Anyway, the best way to deal with private sellers is to ignore them. Ignore the listing. Let them have that little part of the market. They have always existed in our marketplace and they always will. And, if you have to deal with them, be ready for a bumpy ride, up a muddy hill, in the rain, in France, in 1918 with people shooting at you from all directions.
So in the midst of this private seller fiasco, I get this email:
Hi Keith just read your article blog whatever you wanna call it, and I must say your full of shit your numbers are way off and you use a 300k house. Why don’t you try using a 600k home and tell me how horrible it is to sell a home private or even a 1 million dollar home and tell me it doesn’t make sense to sell private anothing thing I’m listing my home private could you help me post it on MlS?
First I laughed out loud and then I put the email into my “respond later” folder, a folder I keep when I don’t want to get into trouble for being too honest, too sarcastic or too mean, a folder I keep for when I think the second response or maybe the third will be best.
Sometimes the best response is no response. Where is the gain, right? There is nothing to gain by engaging with this guy.
Money, money, gain and loss
It is all about money. Money makes the world go around.
I was listening to a podcast recently about human nature and money. Briefly, the researchers introduced the concept of money to monkeys, in this case little discs that monkeys could exchange for grapes.
The set up was:
In part one, one researcher would give two grapes for a disc and the other would give one grape for a disc. The monkeys quickly learned to visit the generous researcher.
In part two, the second researcher would sometimes give three grapes but sometimes give one grape and often two. The other researcher would always give two. The first researcher was consistent. The second researcher was random. The baseline was pretty much set for monkeys that one disc was worth two grapes. Although the second researcher would sometimes give a bonus grape, the other times when he only gave one grape the moneys would feel cheated. On average though, both researchers gave the same number of grapes.
The monkeys stopped going to the second researcher (the random one) because the fear of loss was stronger than the opportunity for gain.
For the email above, the home seller calculates how much selling his house is going to cost him (how much he is going to loose) and that upsets him. I know it is his money, not mine, not another Realtors. It is not fair. It is also not fair that a house he bought for $300K is now worth $600K (but that is another story). There is a lot of money at stake and that is part of the problem. The private seller thinks about how much he is losing, not how much he is gaining.
I’m not trying to justify the high commissions that realtors earn. I’m only trying to understand how as humans we are wired. We are lose averse.
The post that the emailer was referring to was written years ago when I thought private home sellers were stealing our business. They are not. They sometimes steal our time, but I’ve learned from my recent experience to take a new approach, one of conscious avoidance. (I will be writing about that experience in the next post on the subject.) Private sellers won’t be wasting any of my time in the future.
To answer the question in the title of this post, I’m the monkey.
Edit: When I started writing this, I thought that the private home seller was confused, overwhelmed and out of his depth. That was my own cognitive bias.
It turns out that not only was I a monkey, I was wrong in underestimating the guy. He is clever as a fox. He knew what he was doing the whole time.
