FAQ: What Does "Motivated Seller" Mean?

By
Real Estate Broker/Owner with New Paradigm Partners LLC EB #1326335

Simple. It means that warning bells should be ringing in your ears.

 

Motivated SellerLiterally, it means the seller wants to sell his home. But that alone isn't sufficient to discern the real meaning when you see "motivated seller" in an ad. Of course he wants to sell his home - he wouldn't have it on the market otherwise. And while it's true that there are some sellers out there who really don't want to sell, or are just testing the waters, they're actually pretty rare. Sellers may be reluctant, sad or unhappy to be moving on, but it's reasonably safe to assume that if a house is on the market and a sign is in the yard, the seller has made a commitment to sell.

 

So what does it actually mean?

 

Short version - it means that the seller is being poorly represented by his agent.

 

Why is that? "Motivated seller", and similar phrases, strongly suggest that the seller will take less than he is asking for the home. If that phrase appears as marketing copy in an ad, presumably written by the listing agent, or is otherwise communicated, unless the seller has a full understanding of the impact of saying that and has approved its use, we have a problem. It's a violation of real estate licensing law in Colorado for an agent to indicate that a seller will accept less than asking price. (And likewise for indicating that a buyer will pay more).

 

And even with seller approval, it's poor marketing. It suggests that the home is over-priced or has some kind of problem, that the seller will be perhaps more flexible than he is actually willing to be, and that price is going to be a major negotiating issue - one with a vague starting point. Buyers will be expecting a bargain, and may be more reluctant to give up that expectation once it has been dangled in front of them.

 

Wouldn't it be better to just price the home correctly to begin with or adjust the price if necessary? Or if the price is sound, show a positive commitment to it instead of undermining it from the beginning?

Posted by
Mary & Dick

Mary & Dick Greenberg
New Paradigm Partners LLC
2601 S. Lemay Ave. #41
Fort Collins, CO 80525
970-689-4663
www.maryanddick.com

 

Data Source: IRES MLS

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Steffy Hristova 06/03/2017 03:14 PM
  2. Kasey & John Boles 06/09/2017 09:50 AM
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Rainer
73,559
Patrick Willard
Rio Rancho, NM

Whenever I see "motivated seller" in the remarks I read it as "The seller won't give me the price reduction we desperately need so please bring me an offer.... any offer."

Jun 07, 2017 05:34 AM #51
Rainmaker
235,497
John Wiley
Jones & Co. Realty - Cape Coral, FL
Lee County, FL Real Estate GRI, SRES,SFR,PSA

Thank you for putting an important point in the spotlight.

I have never approved of the "motivated seller" ploy.

An agent has a duty to get the best results for their consumer. 

I do not feel that using this term is in the best interest of the seller.

Jun 07, 2017 06:10 AM #52
Rainer
346,015
Anna Hatridge
Goodson Realty - Bonne Terre, MO
Missouri Realtor with Goodson Realty

When my buyers see "Motivated Seller" they assume the seller is desperate and will accept an offer well below list price.  

Jun 07, 2017 06:14 AM #53
Anonymous
Chris Smith

If the seller is truly motivated the price should reflect how motivated they are. I agree, agents need to do a better job of explaining their pricing strategy and not just take the listing at whatever price the seller wants. The market is too astute to fall for this old trick.

Jun 07, 2017 06:33 AM #54
Rainer
220,030
Ron Aguilar
New American Funding - Saint George, UT
Mortgage & Real Estate Advisor since 1995

Motivated: Intended, actuated, drive or impelled. An agent should always determine if the seller is very interested in selling, otherwise you know the story from there...

Jun 07, 2017 07:21 AM #55
Anonymous
John Munroe

I'm a FL R.E. Broker so my opinion and experience may differ from many who have opined. From my practical experiences, if a property is priced fairly (at perceived market value) and the agent has "UPDATED" a listing with "Seller Motivated or similar terminology", I will call the agent to see if there is real information that backs up the motivation. Sometimes there is and as a result I have been able to help the seller unload their property and secure a better value for the buyer. This is also true if a property is priced at what is perceived below market asking price and those terms are in the listing. I guess I would not dismiss it's usage carte blanche as bad salesmanship. Sometimes things change and seller's motivations have accelerated and they can afford to sell below market.

Jun 07, 2017 07:28 AM #56
Rainmaker
371,991
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

I agree with your point here--although I would not put the blame totally on the agent. Usually when I see this phrase it means:  there is something wrong with the house (poor location, odd floor plan, etc) and the price will have to compensate for it.  Also I interpret it as meaning the seller is willing to negotiate but won't lower the price to where it should be--s/he is waiting for an offer to get the negotiations underway.

Jun 07, 2017 07:58 AM #57
Rainer
77,662
Donald Tepper
Long and Foster - Fairfax, VA
DC area investor helping heirs of inherited homes

Some very good points in the original post and in the comments. (I especially liked Patrick Willard's "Whenever I see 'motivated seller' in the remarks I read it as 'The seller won't give me the price reduction we desperately need so please bring me an offer.... any offer.'"

Still, let me play Devil's Advocate, particularly from the perspective of a real estate investor.

Investors want to know what the motivation is. And, frankly, if the listing agent won't reveal that (and can't, of course, unless the seller has authorized it), then I know there's no motivaton there. Motivated sellers will tell all--and more--in order to sell their houses.

Motivation often involves time. As one other answer notes, maybe the sellers have bought a home of choice, and the clock is ticking on the sale of their current house. Maybe there's a job relocation. Maybe there are looming financial difficulties; there may be equity in the house but no money for the next mortgage payment. In these cases, the seller's highest priority is on a fast sale, not a sale that will result in the largest net to the seller if it means waiting 6 months for a contract.

There are other motivations, too. An elderly person who is selling to be closer to his/her children. Or children who've inherited a parent's house. The house is vacant; there may be a mortgage or HELOC on it; and the kids want to get on with their lives. Oh, and the house doesn't show well. In these cases, sellers can be highly motivated. But sales price isn't the answer. A quick sale, sometimes with the house in as-is condition, is the solution.

So why not just price it low--very low--to begin with? First, because many retail buyers will take one look and run in the other direction. No stainless steel appliances and granite countertops? A master bedroom not large enough to accommodate the king-size bed and multiple other pieces of furniture? You're not going to sell that house to most retail buyers regardless of price. "Motivated," coupled with an agent's ability to explain the motivation, can make sense.

Or take a house that, nicely fixed up, could sell for $550,000. But it needs $85,000 worth of work. Are you willing to suggest to the seller that the house be priced at $425,000? (What about $325,000? Informed, knowledgeable sellers have made and will make deals like that.) What's your broker's reaction going to be if that's the listing price? Even if it's an inherited house and the heirs want to sell quickly? Again, the motivation really doesn't hinge on price. The seller is motivated to find someone to buy quickly in as-is condition.

I agree that "motivated seller" is a greatly overused term and can be code words for "make a low offer on this one." But there are plenty of instances in which the seller really, truly is motivated. And the solution may be quite independent of the price.

Jun 07, 2017 08:10 AM #58
Rainer
17,226
Peter ReJune
David Marshall & Associates LLC - Palm Beach Gardens, FL
Trusted for Service, Respected for Results

smart post, short and to the point. This typical agent buzz words that they wrongly assume will help sell the property faster. All it does is undermine the sellers negotiating position.  Those that use the typical buzz words either dont know and or dont care how others will interpret their meaning. Sellers should pay more attention to how their home is being represented.

Jun 07, 2017 08:20 AM #59
Rainmaker
1,771,539
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

A well deserved Feature Dick. I have never liked this phrase. I've never understood why a seller would want to be labeled as such.

It's always had a negative connotation in my mind.

Jun 07, 2017 10:57 AM #60
Ambassador
2,294,002
Paul S. Henderson, CRS, REALTOR®,
RE/MAX Professionals. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

Those  2 words really show a disrespect to the Seller Dick Greenberg. All Sellers should be excited to receive offers however...

Make today special! 

Jun 07, 2017 11:00 AM #61
Rainmaker
596,352
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Ultimately, what the use of this terminology should mean is that the listing agent has written permission to use the phrase.  Without such permission, the agent is hanging out there an Oregon country mile. 

Jun 07, 2017 02:48 PM #62
Rainmaker
1,049,530
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

I think you can get the same message through with correctly pricing your home ... and aggressively marketing it, can't you Dick Greenberg ... and it doesn't smell of desperation.  You tend to read between the lines with the tag "Motivated Seller" ... IMO ...

Gene

Jun 07, 2017 02:52 PM #63
Rainer
23,898
Suzie DeYoung
Fridrich & Clark Realty, LLC - Brentwood, TN

I am always surprised when I see the words "motivated seller" used in marketing.  Most often I see it in the agent only comment section, and wonder if the sellers know that is being used.

Jun 07, 2017 06:45 PM #64
Rainmaker
337,226
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

If the seller is motivated, and the house is still not sold in this hot market, then the price needs to be dropped right now. If the seller needs to net a certain amount and dropping the price will reduce that net, then sorry, other plans or compromises need to be made.

Jun 07, 2017 07:09 PM #65
Rainmaker
489,289
Kasey & John Boles
Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

Yep, you are exactly right on with this Dick Greenberg .  I think many times the sellers may not even know their agent has placed this in the advertising. -Kasey

Jun 08, 2017 09:48 AM #66
Rainmaker
335,069
Pat Starnes
Front Gate Real Estate - Brandon, MS
Broker Associate, ABR

You've sparked an interesting discussion, Dick, by reading through the comments. Most of us think "desperation" when we see "motivated sellers". If the house isn't selling or being shown, holding a sign and saying "motivated" will only attract the bargain shoppers to undercut the price, IMHO. 

Jun 09, 2017 06:40 AM #67
Rainer
3,275
Karla Jusko
Exit Homestead Realty - Vineland, NJ
REALTOR serving South Jersey

Great post, I always think this term tells buyers to lowball their offer. 

Jun 09, 2017 12:01 PM #68
Ambassador
1,892,817
Debe Maxwell, CRS
www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

LOVE this post, Dick and agree wholeheartedly!

"Motivated Seller" simply SCREAMS of desperation and is only asking for low-ball Offers (even in a hot, sellers' market!).

Jun 10, 2017 08:36 PM #69
Rainer
405,498
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Amen and Amen. 

Jun 11, 2017 10:53 PM #70
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