As a real estate agent, you do a lot of preparation before meeting with a homeowner to discuss their listing. Researching the area and past sales, running reports, and compiling an accurate comparative market analysis (CMA) all take time and effort, but you understand that it’s important to give your clients the most accurate listing price. After all this work on your part, there’s nothing more frustrating than having the seller insist on overpricing the home.
Before you can convince a seller to agree to a realistic selling price, it’s important to understand why they insist on overpricing their home in the first place. Remember, to your clients, the process of selling their home is a huge financial and emotional decision. Start your relationship with them by establishing trust, setting good boundaries, understanding their fears, and showing them the reality of the market. Here are four tips to help you work through tricky situations when sellers are convinced your price is too low.
1. Look at it from their point of view
Selling a house is easy. Selling a home is hard. A home is where memories are made – children take their first steps, anniversary parties are celebrated, family pets are welcomed, and irreplaceable items are kept. Sellers who overprice their homes are usually including the emotional value of the property, not remembering physical value. When you understand this, you can begin to separate the emotional ties from the physical value and help your clients do the same.
Start the conversation by asking them what they think their home is worth before you share your valuation of it. Don’t react to their response, but do ask them how they arrived at this price. Be curious, not defensive, about their process. It’s always better to ask them to explain their process than to counter it with reasons why it’s not realistic or appropriate. Once they’ve shared their price, they’ll want to know what you think the house is worth. This is the time to show them your process — when they’re asking for your numbers. Garry Wise notes, “Never tell a seller ‘this is what your home is worth.’” Instead, say “The Market is willing to accept $210,000 for your home given all of this data.” Share a customized CMA report that shows how you’ve factored the value of their home. The key is to show the seller that you have all the data, and this is how you’re arriving at the suggested price.
2. Share the 10-days rule
If other properties around your client’s home are selling quickly, theirs should too — if it’s priced realistically. If their listing has been on the market for ten days with no showings and no offers, it’s time to drop the price. Explain to them that the bulk of showings will take place in the first 3-4 weeks of it being listed. If they wait too long to drop the price, other agents will presume the property overpriced and be reluctant to show it. Build the price-reduction process into your contract, so you don’t have to go back and convince your sellers to lower their price later. Remind clients that this isn’t personal. It’s practical. If you explain this process during your first meeting, you’ll save yourself a lot of headache.
3. Show them the competition
When a client wants to list for $325,000, and you know the house won’t sell for more than $250,000, invite them to go on a home tour with you. Show them what a $325,000 home looks like. Most people can’t imagine the difference of $75,000 is that much, but when they see that a $325,000 property is bigger, updated, and more luxurious, it sells your client on a reduction, and you won’t risk offending them. You’re just showing what a real luxury home looks like.
4. Create a buyer feedback system
Develop an email survey for potential buyers and send results of this survey to both you and your seller. This way the seller gets feedback about the price directly from buyers. They’ll realize it’s not just you thinking the price is too high, but the market does too. Not only will the emails give you a reason to approach your seller, but they may even initiate a conversation about lowering the price.
While this process can be difficult the first few times, these tips can help you work through even the most sticky pricing situation. As you approach the midpoint of the year, it’s time to reassess your 2016 goals. To make sure you’re meeting them, it’s important to connect with the right consumers. Position yourself in front of buyers and sellers who are actively searching for properties in your local area. Follow these three, easy steps to connect with quality leads near you and meet your goals this year.