Rehabbing & House Flipping

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Patrick Kaiser
  • Real Estate Agent
  • Mesa, AZ
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How do I convince flippers to list their homes reasonably?

Patrick Kaiser
  • Real Estate Agent
  • Mesa, AZ
Posted Jul 18 2022, 11:01

Background: I am a real estate agent who runs a flat rate listing company, meaning I make the same amount no matter how much houses sell for. For that reason I don't mind necessarily care if houses sit on market forever, but they are losing tens of thousands of dollars over and over and over again and its sad.

How do I get flippers to list their homes for reasonable prices? I have listed probably 40 or so flips over the last few years as an agent. Obviously I'm just getting started, but I want to hear from both flippers and agents as to why I cannot convince flippers to list their homes for reasonable prices? I've got 12 comps all adjusted for upgrades, overall market analysis, detailed zip code analysis, exact model matches, recent flips, let's say all that data suggests a list price of $425,000, inevitably 90% of my clients want to list at $475,000 "just to see". The wholesalers ARV estimate is $430, my CMA is $425, we have 3 different ways to analyze the property all arriving at price between $420,000 -$440,000.

This is not once or twice for me, but upwards of 30 houses sitting on the market for months, most of the time in the hottest real estate market in the history of the U.S. After 60-90 days, multiple price reductions, and extra $10-12k in holding costs, house closes for lets say $419,000. 90% chance we could have gotten multiple offers and sold for around $435,000 if we listed at $425,000. 

All said and done I still make my money, but the flippers are losing (and I actually calculated the average) around $12,500 per flip by doing this. What am I doing wrong? As a flipper what can I tell you to convince you that numbers don't lie? The market is shifting and it's more important than ever to list reasonably and I had 2 more flips in the last week listing 10% above all comps. I have very detailed analyses. Both these clients are experienced flippers, one has sold 3 houses, the other about 5 (all 5 with me and my CMA was within 1% 4/5 times, and every time they insist on listing 10% too high)

Phoenix, Arizona

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Andy Sabisch#1 Rehabbing & House Flipping Contributor
  • Investor
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Andy Sabisch#1 Rehabbing & House Flipping Contributor
  • Investor
  • Jackson/Vicksburg, MS
Replied Jul 18 2022, 18:21

Great post and I am interested in the responses.  There is a house near us that is a flip . . . . the inside was well done but not to the level I would have expected in terms of finishes (gaps at baseboards, vanities that are not set against the wall but rather the baseboard, no door stops which has dented walls, missing or miscolored wall plates. . . . again, the finishes).  They listed it 130+ days ago with an ambitious price but amazingly they got a full price offer . . . but it did not appraise and the buyers asked for a $5,000 reduction.  The seller refused and it went back on the market.  Over then next new months it went under contract and back on the market 3 times for various reasons and the price has been dropped 4 times - down a total of $30K.  So they had an offer that would have been $25K more than the list price now and without the additional holding costs . . and with interest rates going up the pool of buyers is going down and in this case, they missed a few buyers being hard headed on the price.  Got the backstory from an agent that was holding an open house and we had stopped in.  You are right, price it correctly and it will often sell over list (our last one using a straight flat fee agent) . . . expect a price that is not supported especially as the market shifts, the story has a different ending

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Mark Cruse
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Mark Cruse
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Replied Jul 18 2022, 18:55

Not sure who you are dealing with but many of these flippers are newbies who really don´t understand the game to its full extent. For many of them, they don´t develop various exit strategies and are trying to sell at a price that will not make the project a loss. Over paying for the property, underestimating budgets, being way behind schedule, mounting holding costs and not knowing how to adequately manage the contractors leads to a project that´ś under water unless it sells high. There are some cases where they can´t even make enough to pay off the hard money lien so they have no choice. In this case, they are either rolling the dice from a wish factor or they are desperate and confused; not understanding they will lose even more by it taking months to sell. For the more experienced types who do understand the process they may be able to lean back some and get that higher number in time. Itś a sellers market and if the experienced developer was able to pull it in with the right amount of precision, the holding cost may not be that big of a factor. Sometimes they will get the $475 over time if they know what they are doing. For real though, the bulk of it most likely comes from the first group I mentioned. 

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Mike Hern#1 Market Trends & Data Contributor
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Mike Hern#1 Market Trends & Data Contributor
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Replied Jul 18 2022, 19:20
Quote from @Patrick Kaiser:

Background: I am a real estate agent who runs a flat rate listing company, meaning I make the same amount no matter how much houses sell for. For that reason I don't mind necessarily care if houses sit on market forever, but they are losing tens of thousands of dollars over and over and over again and its sad.

How do I get flippers to list their homes for reasonable prices? I have listed probably 40 or so flips over the last few years as an agent. Obviously I'm just getting started, but I want to hear from both flippers and agents as to why I cannot convince flippers to list their homes for reasonable prices? I've got 12 comps all adjusted for upgrades, overall market analysis, detailed zip code analysis, exact model matches, recent flips, let's say all that data suggests a list price of $425,000, inevitably 90% of my clients want to list at $475,000 "just to see". The wholesalers ARV estimate is $430, my CMA is $425, we have 3 different ways to analyze the property all arriving at price between $420,000 -$440,000.

This is not once or twice for me, but upwards of 30 houses sitting on the market for months, most of the time in the hottest real estate market in the history of the U.S. After 60-90 days, multiple price reductions, and extra $10-12k in holding costs, house closes for lets say $419,000. 90% chance we could have gotten multiple offers and sold for around $435,000 if we listed at $425,000. 

All said and done I still make my money, but the flippers are losing (and I actually calculated the average) around $12,500 per flip by doing this. What am I doing wrong? As a flipper what can I tell you to convince you that numbers don't lie? The market is shifting and it's more important than ever to list reasonably and I had 2 more flips in the last week listing 10% above all comps. I have very detailed analyses. Both these clients are experienced flippers, one has sold 3 houses, the other about 5 (all 5 with me and my CMA was within 1% 4/5 times, and every time they insist on listing 10% too high)

 You assume flippers are logical. ;-) Don't do that, you'll be much happier.

I flip in Phoenix, Mesa, Glendale, etc. What are you calling "resonable" and how do you come to that conclusion? 

The market is dynamic and my needs change over the course of the flip. Besides, I set my price to sell when I bought the property. That is how I determined if I wanted to do the flip. The market has been only going "up" so far, why would I set the price at anything less than what I think I can stretch out of it? And, you as my agent are doing EVERYTHING to get me top dollar Right? So, I just let you do your job and market the product the way a pro does. I can put it on the MLS for $895 with one of those listing agencies, but since I'm paying you, I expect something for it and that is getting top dolla'.

By the way, I get my asking price more often than you think. Sometimes I'm wrong, but it's worth the try when it's averaged out. If I make an extra $50k on one but am stretching $15k on another and don't get the extra, that's the way it goes. I'm still $35k ahead.

Now, in this market, which has changed dramatically, I'll still sell to anyone who will pay my asking, (no change in policy on my part) because even though the market has slowed for agents, there are still a lot of buyers looking for high quality product.

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Jeff S.
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Jeff S.
  • Lender
  • Los Angeles, CA
Replied Jul 19 2022, 13:08

The $12,500 average loss you calculated, @Patrick Kaiser, is an opportunity cost. It never actually comes out of the rehabber’s pocket so it’s not something most ever think about. This is not true for other expenses.

Property taxes, insurance, and utilities are ongoing. The longer a flipper holds the house, the greater these expenses become. They are real and out of pocket, though usually small. Far beyond these are borrowing costs. Most rehabbers buy using hard money and this is not cheap. In fact, finance charges are usually the second highest costs behind construction expenses. Most rehabbers are reminded of this at the beginning of each month when they make their loan payment.

You would add value to the sale by asking your client what they are paying each month in holding costs. Divide that into the premium they are asking over ARV and ask if they are ok with waiting that many months to sell. If they are confident the property will sell within that time period, it might be worth it. Beyond that period, or if the house sells for less, they will be losing spendable cash.

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Bob Okenwa
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Bob Okenwa
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  • Peoria, AZ
Replied Jul 20 2022, 09:23

@Patrick Kaiser

Flippers are trying to extract all the juice from the orange so to speak and I've dealt with this before. Had a property on the market 1.5 years that I felt should list at 379.9k. Seller threw all my logic out of the window and said that 397k was the number. No real market analysis behind that price or anything, just felt that we could get more as we had the best home in the neighborhood and very good features.

We ended up going in and out of contract 3 or 4 times and the appraisals kept coming back between 360k-375k. Ended up closing at 372k. This was right before the spring surge. The same home just sold for 475k a month ago.

I'd advise to get an appraisal. Appraisals aren't foolproof, but maybe it can help ground their unreasonable expectations. At the end of the day, you can only lead the horse to water but cannot make it drink. A more successful realtor I know will advise the seller about what the market price is and if the seller wants to go above the suggestion, then it can only remain there for 2 weeks. After that, she takes control of the listing and will drop the price as aggressively as she needs to get it sold.

Managing expectations is key and must be done in advance, but it's very hard to reason with unreasonable people.

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Patrick Kaiser
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Patrick Kaiser
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Replied Jul 26 2022, 14:35
Quote from @Mike Hern:
Quote from @Patrick Kaiser:

Background: I am a real estate agent who runs a flat rate listing company, meaning I make the same amount no matter how much houses sell for. For that reason I don't mind necessarily care if houses sit on market forever, but they are losing tens of thousands of dollars over and over and over again and its sad.

How do I get flippers to list their homes for reasonable prices? I have listed probably 40 or so flips over the last few years as an agent. Obviously I'm just getting started, but I want to hear from both flippers and agents as to why I cannot convince flippers to list their homes for reasonable prices? I've got 12 comps all adjusted for upgrades, overall market analysis, detailed zip code analysis, exact model matches, recent flips, let's say all that data suggests a list price of $425,000, inevitably 90% of my clients want to list at $475,000 "just to see". The wholesalers ARV estimate is $430, my CMA is $425, we have 3 different ways to analyze the property all arriving at price between $420,000 -$440,000.

This is not once or twice for me, but upwards of 30 houses sitting on the market for months, most of the time in the hottest real estate market in the history of the U.S. After 60-90 days, multiple price reductions, and extra $10-12k in holding costs, house closes for lets say $419,000. 90% chance we could have gotten multiple offers and sold for around $435,000 if we listed at $425,000. 

All said and done I still make my money, but the flippers are losing (and I actually calculated the average) around $12,500 per flip by doing this. What am I doing wrong? As a flipper what can I tell you to convince you that numbers don't lie? The market is shifting and it's more important than ever to list reasonably and I had 2 more flips in the last week listing 10% above all comps. I have very detailed analyses. Both these clients are experienced flippers, one has sold 3 houses, the other about 5 (all 5 with me and my CMA was within 1% 4/5 times, and every time they insist on listing 10% too high)

 You assume flippers are logical. ;-) Don't do that, you'll be much happier.

I flip in Phoenix, Mesa, Glendale, etc. What are you calling "resonable" and how do you come to that conclusion? 

The market is dynamic and my needs change over the course of the flip. Besides, I set my price to sell when I bought the property. That is how I determined if I wanted to do the flip. The market has been only going "up" so far, why would I set the price at anything less than what I think I can stretch out of it? And, you as my agent are doing EVERYTHING to get me top dollar Right? So, I just let you do your job and market the product the way a pro does. I can put it on the MLS for $895 with one of those listing agencies, but since I'm paying you, I expect something for it and that is getting top dolla'.

By the way, I get my asking price more often than you think. Sometimes I'm wrong, but it's worth the try when it's averaged out. If I make an extra $50k on one but am stretching $15k on another and don't get the extra, that's the way it goes. I'm still $35k ahead.

Now, in this market, which has changed dramatically, I'll still sell to anyone who will pay my asking, (no change in policy on my part) because even though the market has slowed for agents, there are still a lot of buyers looking for high quality product.

I'm a 100% logic driven math and numbers kind of guy, so it is difficult for me to understand people that don't think like me. 

What I am calling reasonable is in line with the comps and current active/under contract listings. When they buy these they buy them from wholesalers who give them projected ARV's. My comp analysis is usually pretty close to the wholesalers, even though wholesalers tend to paint rosier pictures than me. Even then, the vast majority of my flippers will want to list 10-15% above my analysis, the wholesalers analysis, and Zillow's awful estimates. None of these numbers matter to them.

I'm not the world's busiest agent but I've closed 15 this year and have 10 more listed currently. I've closed about 30 flips total. On all but 1 or 2, the closing price is within a few thousand dollars of my CMA, except for maybe those I listed right around the end of April when the market took a big hit.


I don't care if they get above my CMA I have no pride in the situation. But when they list $50,000 above all comps, consistently, pissing away their profits, they don't keep flipping and I lose business and they lose money. It's sad when they were looking at possibility of making $20-$25,000 and end up with nothing. And this doesn't happen once or twice it's more the rule than the exception for me anymore.

You've said you get your asking price more often than not. I get my CMA price which has been established since before the project began over 90% of the time. And I'm usually within $2-3k especially on the appraisal price. The difference is that they list at some ridiculous made up price I can never figure out how they come up with these bogus numbers.

To @Jeff S. The losses are unrealized for sure. That's why I struggle to explain it to them. But when we get to closing table and they break even, they quit the business and thats bad for me. I've started reminding people they are losing $100 every day they have it on the market but they just get upset and don't do anything differently so thats not good for me either. I do ask them exactly what their holding costs are, as well as electricity, HOA, other bills, taxes, and insurance. I caluclate it both monthly and daily and try to help them understand that each month they don't sell, after listing, these are losses against their net. They simply don't get it.

@Mark Cruse They are usually relatively new investors, they almost 100% get referred to me by wholesalers because I have 10 years experience in all construction trades including painting, drywall, cleaning, restoration, and general contracting as my father was a contractor. I also had a business for 4 years called home detailing where I would detail a house like someone detailed a car including windows, carpet, tile, minor drywall repairs, paint touch ups, basic handyman work, and 100% only worked on houses turning them over after tenants and to get ready for sale. I got hundreds of houses turned over. Therefore I am able to help the new flippers throughout the project at least generally showing them what needs to be done (if they listen, which they often don't). I've also flipped a few myself though I'm not an extensive investor but I help them avoid things that don't have good ROI and check in with them every week while the work is being done to make sure things stay on track and on budget. On top of all that, I help contain costs because I do all my work at a flat fee of $3000. Sorry if this sounds like an advertisement but I think the wholesalers send me all the newbies because they are not great at most of this stuff and I hold their hands and walk them through it and I don't gouge them at the end because I focus on volume more than how much I make per transaction. And I get consistent business from flippers, wholesalers, lenders, etc. all who send people my way.

@Bob Okenwa My broker is an appraiser and has done more than 10,000 appraisal and as we work closely together I'm very well versed in how appraisals work and 90% of the time can give a very valid range for what the appraisal will come in at and shoot for the top. My broker is also an investor and his business partner has even been featured here on a BP podcast. There are limiting factors to appraisals since they are now federally regulated. Most agents don't understand how appraisals work and how they differ from CMA's and are often blindsided because the appraisers didn't use the best comps. They are not supposed to. They are bracketing the house to make sure the items they adjust for are accounted for on the comps. And if you know how they work you can know the limitations of what they come in at. In 60 houses, I've only had bad appraisals a few times and I have challenged them and won every time. I've had appraisals come in lower than contracts before, but never out of line from what I predicted before the contract began. Not once. I could pay for an appraisal upfront but since I only charge a flat $3000 for my listing fees, its' not worth it to me. At some point I just have to let people make mistakes if they are determined to do so. Because, as you said, it is hard (impossible in my experience) to reason with unreasonable people.

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Cole Maurer
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  • Scottsdale, AZ
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Cole Maurer
  • Real Estate Agent
  • Scottsdale, AZ
Replied Jul 27 2022, 08:05

Hello Patrick, 

I am also an Arizona agent and will share my thoughts with you on this. 


All you can do is have conversations and good communication upfront. When someone, either a flipper or regular seller, says "Just to see", this is your opportunity to educate them on the error in this thinking/decision. We have seen that even in the last couple of years with extremely hot market conditions, the priced too high "just to see" strategy didn't often work for sellers. In fact, in my experience,  homes that were priced accurately or somewhat "low" is what really created the frenzy that drove extreme competition. The "just to see" strategy tends to only result in price reductions and actually could cause your seller to actually leave money on the table because it's now sat on the market for longer than others. Sellers often think, when they get offers right away that they are priced too low, which actually isn't the case. Buyers ultimately determine prices for property, if no one is making offers on the home, that means buyers view some part of the house as unattractive, either location, condition, or price. If offers come in, buyers are seeing it as an acceptable property and thus are interested, not necessarily because it's too cheap like most sellers fear. 


As for being an agent, you have to respect your time, and investment in the sale of these properties and be willing to let an unreasonable seller go. If you agree to their terms knowing they are most likely too high or not correct, you not only do a disservice to yourself but also to the seller. So sometimes it's okay to say no to a seller and walk away if it ultimately results in a home that is overpriced and not going to sell. You are supposed to be the market expert, so be the expert, present the info, and if your sellers are close to alignment then off to the races! But if your seller is unwilling to see the facts and wants to "just see", I personally would consider not taking the listing. 


My two cents. Best of luck to you! 

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Will Barnard
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Will Barnard
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ModeratorReplied Jul 29 2022, 08:35

I especially like the response from @Cole Maurer above and agree. Many sellers, not just flippers make this very same mistake day in and day out. In a hot sellers market (that we have had across the nation for the past few years), it is almost impossible to underprice a listing. The buyers will flock, and once you have multiple offers, the buyers frenzy and competitiveness to win the bid is obtained. I always priced my listings below what I know they would sell for and then, in most cases, got above what I thought it would go for. This benefited my as the flipper and my clients who were flippers or owner occupant sellers.

The market is now shifting (cooling down) so now is even more important to properly price a listing. The try and see what happens is a rookie mistake and a common one at that. In fact, I even see seasoned agents make these errors (albeit some caused by unreasonable home sellers with overly inflated expectations of their home value).

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Rebecca E.
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Rebecca E.
  • Wisconsin: Eau Claire and Rapids
Replied Jul 30 2022, 05:40

I am neither a flipper nor an agent, but this is what I would do if I was trying to convince someone to do something that they didn't want to do: let someone else convince them. 

if you present the numbers first, give them the bad news that they don't want to hear, they'll be mad at you.  If you say to them, hey look I was right in the past, listen to me now, they'll be mad at you.  

I would hire a buyer, or non-real estate person to do a CMA. Then present that to the flipper. "This is what a person off the street, a potential buyer, will see and value your house at" then you can follow up after they've made their objections, with "these are my professional opinions as to the listing price" (hopefully these two values are close :-D). That way they can be mad at the potential buyer and see you as a team member helping them instead of an adversary.

I dont know anything but thats how i would approach it.

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Matt Greer
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Matt Greer
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Replied Aug 3 2022, 12:04

One benefit I have is I've done investment deals myself so I am able to help them by speaking the language. I'll explain exactly what you said about how homes sit on market and start going over the sellers carrying costs. Then I'll show them other homes on market that underwent price cuts and we'll see their days on market and whether or not they sold for less than the other comps. They usually do sell for less. I try and just give them as much data as possible because most investors are super analytical.

If they are wanting to list for an absurdly high price I tell them that's fine, but I'm going to increase my commission percentage. I explain to them that I am also running a business and I see listings as an investment. If I'm going to risk my money to market a house that has a low probability of selling or will sit too long on market and ruin my reputation I won't take and if I do the reward will match the risk. I know it sounds gruff and not nice, but I'm running a business and have no reason to spend money on marketing a house that won't sell due to the house being overpriced. If I don't analyze a listing before I take it I'm essentially gambling and I'm not a gambler. 

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Miguel DelaPena
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Miguel DelaPena
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Replied Aug 3 2022, 17:13

Patrick Kaiser, I appreciate the question and insights. I'm an agent looking to begin working with house flippers so I appreciate the thread. Having a background in psychology, I noticed you wrote, "I'm a 100% logic driven math and numbers kind of guy, so it is difficult for me to understand people that don't think like me." I totally get that but what might be missing is the emotional aspect, the fear of not making what they need to at the end of the day. Sometimes we can make a strong, logically sound case about something but if the person isn't emotionally ready to hear the truth, it'll do no good. 

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Miguel DelaPena
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Miguel DelaPena
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Replied Aug 3 2022, 17:14

Patrick Kaiser, I appreciate the question and insights. I'm an agent looking to begin working with house flippers so I appreciate the thread. Having a background in psychology, I noticed you wrote, "I'm a 100% logic driven math and numbers kind of guy, so it is difficult for me to understand people that don't think like me." I totally get that but what might be missing is the emotional aspect, the fear of not making what they need to at the end of the day. Sometimes we can make a strong, logically sound case about something but if the person isn't emotionally ready to hear the truth, it'll do no good.

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Vaughn Smith
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Vaughn Smith
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Replied Aug 3 2022, 17:33

@Miguel DelaPena that degree will be put to the test at times in this business lol. @Patrick Kaiser real estate is an interesting business its the biggest transaction most buyers and sellers will ever involve themselves in (including investors) yet people tend to make decisions based emotion rather than logic. I used to let these things bother me when I was new, but now I present the facts to sellers or buyers (on the investing and retail side) and let people do what they wish, if they don't believe as you believe and trust your expertise or if the client is more emotional than logical no data points will change their mind 

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Susan Thelen
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Susan Thelen
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Replied Aug 17 2022, 14:43

They just don't understand the market and have put so much money into it. All you can do is explain what is going on in the market. After you sign the listing you should show them info on your pricing strategy, "if you have zero showings or offers in 10 days then the market is telling us we are overpriced by 5-6%, a few showings and no offers you are overpriced by 4% and so on..."

Good luck!