After several years of a stable real estate market, changes could be on the way. In our recent Secrets of Top Selling Agents webinar titled “Pricing in a Shifting Market” Martin Bouma shared how buyers’ concerns over their home’s future value could affect current pricing.
Founder of the Bouma Group based in Ann Arbor, MI, Bouma is a well-recognized speaker and he works to make sure that agents are equipped with the latest technology, marketing research, and business strategies. Recently, Bouma was the host of our Secrets of Top Selling Agents Webinar. During this webinar, he focused on ways to work with clients during this shifting market.
Step 1: Get the Data
Bouma shared that in his experience, it didn’t matter if agents underpriced a listing because the market would bump up the price regardless. However, this isn’t the case anymore. Now, sellers have options when it comes to selecting an agent. Each of these agents will likely have access to a market analysis and can present the client with the numbers they want to see. Bouma tells listeners that, because of this, it’s important to gain a client’s trust so they know you’re doing what’s best for them. The only way to do so is by presenting data in a way that clients will understand.
When you provide a good understanding of the current market conditions, clients will feel more confident in your decisions and trust you even more since they’ll know you’re trying to do what’s best for them. Here are four ways Bouma suggests to do this.
Compile Local Pricing Data. Each month, Bouma checks in and tracks every school district in $50,000 price ranges. Doing so allows him to have a good idea of the area’s current pricing trends.
Analyze the Data. After this data has been collected, Bouma says to record the number of homes that are active and pending, as well as how many homes sold in the previous month in those districts.
Watch the Area. Agents can then compile this information into a spreadsheet and start watching the trends in each area.
Organize the Data. The last step is to create a graph of each area that can be shared with sellers to show them what’s happening in the districts around them.
With this data, agents can demonstrate the historical trends specific to their area and explain why it’s important to price their home properly.
Step 2: Share the Data with Your Clients
Once the seller has seen the way the market is currently operating, if their home isn’t receiving offers in the first couple weeks, Bouma says agents can have a discussion about price before the listing becomes stale. He suggests telling sellers that, if they’ve had 10-12 showings without an offer, it means the home is priced about 5-percent too high. If no one is even scheduling showings, it means the home is priced about 9-percent above its value. Finally, if there are only online views without any other contact, Bouma states that the home must be priced well above 13-percent of its market value. This helps to give clients a tangible idea of what’s happening and why they would need to reduce their asking price.
Step 3: Have the Conversation
Bouma notes that often agents will have a listing and, when it doesn’t sell, they don’t know what to do next. This is because they’re following an outdated approach to pricing. The usual approach agents follow when they receive a listing is to set the price slightly higher than the average based on CMA results. After they market the listing at this price for a few weeks, completing 10-12 showings, they don’t receive any offers. Because the agent is unsure of what to do next and the listing has become stale, they stop communicating with their client. As a result, the seller will eventually contact the agent to withdraw the listing.
In order to avoid this, agents need to change their approach. Bouma says agents will be successful in this changing market if they adhere to a new format. He suggests meeting with clients weekly to discuss marketing data, absorption rates, their marketing competition, active listings, and pending listings.
Bouma also specifies that it’s important to share micro data rather than macro data, as it’s more attuned to your client’s specific circumstance. To learn more of Bouma’s tips, join the Secrets of Top Selling Agents Facebook Group here. For more free real estate education, including best practices, visit the Secrets of Top Selling Agents website.