LISTED PRICE

Once upon a time, a seller listed a property with multiple brokers.

A few months later, one of the brokers received an offer from a client, which was significantly lower than the owner's asking price. The owner countered with a price exactly halfway between the offer and the original asking price. The buyer rejected the owner's counter, stating that they would stick to their original offer. As a result, the deal fell through.

Aware of the negotiations, the broker lowered the selling price in her ads online without informing the owner.

Question: Is the broker justified in lowering the price in her ads?

Option 1: Yes, since the price came from the owner.

Option 2: No, because advertised prices should always get the owner's approval.

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Are brokers justified in adjusting prices based on recent negotiations without checking with the owner?

A resounding 95% said no, brokers are not justified and should always get the owner's approval for any changes in advertised prices. Only 5% said yes.

It's clear among most brokers that any price adjustments should get the owner's approval. Why? Because if the property is listed with multiple brokers, a price that deviates from the owner's true asking price can actually hinder the sale. Let me explain.

In negotiations, sellers and buyers aim to maximize value within the Zone of Possible Agreement (ZOPA). Advertising at the owner's bottom price is like conceding defeat in negotiations, which often occurs when the seller is distressed or desperate. Once the buyer senses this, they may offer an even lower price than the already reduced one.

Moreover, while a lower advertised price might attract more buyers, the owner may not be willing to offer the same reduced price to everyone. The reduced price from a previous negotiation could have been a one-time offer specifically for that buyer, possibly because the owner knew them.

Finally, buyers hate it when prices are adjusted higher after they make an offer at the asking price. If a buyer comes hoping to close at the reduced price, only to find out the owner wants more, it indicates untrustworthiness on the owner's part. Meanwhile, other brokers who may have buyers at the higher advertised price are turned down because of the impending offer at the lower price.

So what should be done?

The proper approach is to advertise at the owner's original asking price and verbally mention that the owner may be willing to negotiate based on previous negotiations. Just like sellers in tiangges, refrain from advertising your bottom price.

For more insights on negotiations, I suggest reading the book Negotiation Genius by Deepak Malhotra and Max H. Bazerman.