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10 PRICE REDUCTION TIPS

After 15 years of selling financial products, I am very comfortable talking numbers with people...

Pricing is the key to selling homes.

Yes, you want the home staged correctly...

And yes, the home needs to be marketed properly...

But if it isn't priced right, you have no chance.

Period.

With that in mind...

10 TIPS FOR GETTING MORE PRICE REDUCTIONS:

Have a pricing reduction system and explain it to your clients up front.
It is best to price homes correctly from the beginning. Nevertheless, many clients will want to test the market. I understand. So you need to have a price reduction system and explain it up front.
My system: My listings will have at least 2-5 showings per month. They will also have a contract within the first 10-15 showings. If they do not, they are overpriced.
That is my pricing system. You better have one too...
Bring a listing modification form on your first appointment.
I want my clients to understand the process up front. Part of that is being comfortable with the paperwork. I show the listing modification form at our first meeting, so they will feel comfortable with the paperwork and the process.
Set your clients up with an email search of their neighborhood.
Keep them educated. Using the local Multiple Listing System(MLS), agents can easily provide clients with detailed information from their neighborhood or subdivision. With this information in front of them, your clients will usually understand the realities of their own market.
Keep your clients focused on the buy side.
In this type of market, the selling of a home can be a difficult time. There are less showings, contracts, and offers than there were 5 years ago...
Keep them motivated by looking at some homes. Set them up with an internet search of homes that match their needs/wants. If they find something they really like, they may be motivated to price their home to sell even sooner.
Show them the internet traffic.
I send my clients weekly reports from Trulia and Realtor.com that show the on-line traffic their homes are generating. They see their homes are being "seen" even if they are not being seen.
Let the client have final say on pricing.
I try to act as an advisor for my clients. An advisor who educates. Who consults...
But the ultimate decision is theirs. Let them know that. They will make the proper decision. Eventually...
Stay on top of the subdivision/immediate competition.
Become the expert for the neighborhoods you are market in. Being the "local expert" will give you confidence that will lead to better pricing...
Give them what they want.
Host open houses. Most clients appreciate their agents hosting open houses. They will know you are working for them on that day. They will adjust their prices quickly when they know you are working hard for them.
Don't ask for price reductions.
I use a "passive aggressive" approach to sales. I don't ask for price reductions. I want my clients asking me to reduce the price.
Post your thoughts on pricing.
This post will probably be read more than 1000 times. Some of those readers will become clients. They will already understand my "system". These are great clients to work with. They called me.

I hope some of my tips work as well for you as they do for me.

Ken

Your Naperville Realtor

Ken Tracy Real Estate on Facebook

Posted by Ken Tracy Naperville Illinois Real Estate on 07/08/2010 10:26 PM

Comments (163)

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Originally posted at: Ken's Naperville Real Estate Blog : 10 PRICE REDUCTION TIPS

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163 Comments on 10 PRICE REDUCTION TIPS

JUL

2010

All great tips Ken. It is nice when No. 9 happens. If we coach them properly, they will know when the price adjustment is needed.

Great tips! I usually have price reductions already agreed to in the listing agreement so they happen automatically.

Ken, I follow most of what you've written here. We talk about price reductions at the listing appointment and that's when we set the due date for a price reduction (3 weeks later) if we're not having showings. If the showings are still high, we re-evaluate.

As far as number 1, I believe that 90% of the marketing job is to come on market with a good price.

Ken--excellent blueprint. You might call it, the "Pro-active way to get price reductions without ever asking for one."

Ken- It is great to have a plan right up front so they understand what will need to be done.

In our area, many sellers will agree to future price reductions until the time arrives then they drag their feet.

JUL

2010

Hi Ken, Excellent post, great list of ideas to work from.

These are some great tips! I appreciated reading this, and will save for classroom use! Great job!

Thanks for addressing the most important aspect of selling a listing and also the most difficult to do.

Ken, the problem is everyone thinks their home is the exception. After time they usually see the light.

Good thought Ken. There are many sellers that "forget" the numbers you tell them. Getting a pre-signed reduction form is a good idea.

Hi Bill, B+J, Wade, Chris, Dan, Linda, Samantha, Nancy, Karen, Damon, and Scott. Thanks so much for stopping by.

Ideally all listings would be priced right from the beginning. It doesn't always work out that way...

I have never done the presigned reduction. I know agents that do. If the sellers are cool with it, I would love it...

Thanks again everyone!

Ken

Great tips. You are so right pricing is key and best if it is handled up front not a couple of months down the road.

I never thought about doing number 3- that is a wonderful idea... Thanks!!1

Ken great tips!!! I like bring the listing amemdment with you.

Ken - An excellent post. We usually tell them up front about our price reduction plan of action upon taking a listing.
We don't like suprises and neither do they.

Ken,

You're right. However, many agents go the price reduction route without proper marketing at the higher numbers. Yes, you have to have Opne Houses etc. so that the client will appreciate that they didn't work.

Brian

Outstanding read, thanks Ken!

Nice post! I have bookmarked it for future referance. I sort of have a similar plan.

Ken, I agree with all the tips save #9. I believe it is incumbent upon me to ask for the price reduction, especially if the market is "moving away" from the sellers. They may want me to act with a sense of urgency, although they may not due to some of the psychological hurdles about selling.

Asking does not equal pushing either.

"Would you consider reducing the price in the next week to 10 days to help me generate renewed buyer interest?"

Well I pretty much agree. Your "system" sounds a little too static but otherwise we agree. Price reductions should come up at the listing for sure. Then do not be a stranger and when you talk make price part of the conversation... I tend to keep escalating the discussion over three or four weeks. I also often have a reduction agreed to at listing... WHAT EVER YOU DO DO NOT GET BEHIND THE MARKET AND PLAY CATCH UP!!!

Ken, great tips and especially in our current market! Sometimes the houses are priced right at the beginning of the listing, but the market unexpectedly changes, for whatever cause, and then a price reduction becomes a necessity. ~ Susan

Ken-Great list filled with excellent tips, Thanks for sharing them with us.

We started doing a price reduction addendum on short sales at the start of the listing where the seller signed the authorization for automatic price reductions and have now incorporated that into all listins when possible.

Ken - A very prevalent post for this current market. Well done. We usually tell the sellers right up front about our price reduction plan. We make sure they understand the situation and that it is not in their best interest to have to reduce but may be needed to get more buyers interested in their property.

Great list Ken. We actually set up a review three weeks to the day we list a property. We have them mark their calendars just like a doctor appointment and they know we will be discussing activity and price. We really like your idea #3 and will be implementing that one. Congratulations on your feature, you deserved it.

Ken - excellent suggestions. In this market it is an essential discussion to have with agreed upon time frames. While I think some sellers will suggest a price change, I have no qualms about asking if the data and activity indicated it needs to happen. Usually that works fine, especially if you support your points and have a diiscussion. I don't tell, I suggest.

Jeff

I like the idea of a price reduction addendum at the time of listing. Price reductions are a reality,

Ken, great suggestions. Educating at the beginning is critical.

Education is the key to a better understanding by sellers as to what is a reasonable price for their home. This is worthy of a re-blog.

Ken, I have a system called the Systematic Market Approach to Home Selling. I tell my clients if they do what I say, we should get them out of the house in 30-45 days. It is painstaking listing with me but in the end, no reward comes out of something not well-prepared.

Pricing is more critical than ever before in a buyers market. Homes that go on the market too high will not get much traffic and go stale with new deals coming on the market like short sales,foreclosures and must sell clients.

good points- especially about having a system upfront about price reductions.

Its a great strategy to agree on price reductions up front. I ask for them in writing so there's no backing out. I also believe that the best strategy is to price it right in the beginning and there will not be a need to implement some of the other strategies.

Good tips and comments. One thing I am grateful for the current market here in La Quinta, California is that people are much more open and willing to reduce prices than they ever have been. I remember a few years ago, people would be very challenging and even mad when you mentioned a price reduction. I feel the key is to get them on board with reduction up front or don't take the listing. We do not babysit houses.

Ken - great tips. I too send my sellers the internet traffic weekly and find this helps a lot. When they are not getting showings but we are getting a ton of internet traffic, they tend to figure it out themselves. I also find that Homefeedback.com works well for me. That way the information on the price comes directly from other agents. After reading the feedback from other agents, I often get a call saying It's time to reduce the price. It's wonderful!

I do the same with the internet traffic. Thanks for the post.

Excellent tips, Ken. I've bookmarked your post for future reference.

Hi Richard, Shanna, Ritu, L+R, Brian, Matthew, Angelica, Andrew, Perrin, Susan, Joe, Joes, Robert, A+P, Jeff, Linda, Ted, Tanni, Loreena, Mark, Bernadine, Lori, Lori + Bruce, Jamie, and Bill. Thanks so much for stopping in.

Wow! Love the power of that little gold star!

Yes, it is best to price right from the beginning. Some clients want to fish a bit and I don't blame them. I have been surprised before.

Andrew! Where have you been? Hopefully you have started writing again on AR...

Loreena, it sounds like you have a more advanced system. Awesome!

I understand those that ask for reductions. I try to be very subtle. I keep price in my clients mind, but never push...

Thanks again everyone!

Ken

Great post!! good advice for listing agents.

Generally good advice but I had to laugh when I got to number 9. Reasonable clients who are willing to self-initiate price reductions are great. There is nothing particularly difficult about price reductions when this happens. The really tough conversations are when your seller (even when consistently presented with all the prudent information) just believes his/her home is better or different from anything else out there. They believe their home is priced right when you know its not. They are waiting with the "it only takes one" attitude.

What about showing them the competition? I have often had clients look with me on my laptop at competing listings and had them draw their own conclusion.

Hi Ken, I like your emphasis on educating the customer up front. The other issues are so much easier with advance planning.

Ken, thanks for the great list of pricing strategies !!!!!!!!!!!!!!!!!!!!!!

Great system Ken- alot of your points were in a floyd wickman sweathogs class we took in 1999 lol remember those? still applicable today!

I am not really sure about the whole "price reduction" thing. Yes it's a good idea to have a plan in mind at the beginning to be ready for a market change or in light of starting "slightly higher" at the beginning. As difficult as it might be, I try to price as close to real market as possible at the beginning.

Hi Ken. If it's priced well in the first place then there is no need for a price reduction. For short sales I let the seller know ahead of time and have an MLS profile sheet prepared for future price reductions.

Hi Ken,

if you don't ask does the other nine points get them to ask you?

Good points...

Great tips Ken but my favorite is number 3

Set your clients up with an email search of their neighborhood.

I do this for all my buyer clients but now I will do it for my seller clients. What better way to keep them informed on the market than for them to see every new, contingent, sold and REDUCED home in their neighborhood, and almost the minute it happens! Thanks for a great list!

Ken:

Good stuff there my friend, we price our homes at market value, but the market can change and having a process in place reduces the stress. Loved it...

Hi Ken,

I'm not an agent, so I'm probably missing something here, but,

if there are 2-3 similar homes in the same price range....

would the buyer be more attracted to your listing IF some of the price
reduction went into a financial concession?

It could lower the rate permanently
or temporarily, and save them real money NOW.

In a price reduction, the benefit comes when they sell,
years later.

I wonder, do buyers want it NOW or LATER?

If sellers are going to reduce the price, does it really matter
if it's price or seller concession?

Thanks for your thoughts.

Nice post Ken. Thanks for the insights. As a home inspector, I (of coarse) recommend a "Move In Certified" Seller Home Inspection to agents and sellers. I truly believe that this marketing tool is a great way for agents to help their clients get as close to the asking price as possible.

This kind of inspection from my firm in North Texas comes complete with a yard sign and an online copy of the inspection report. The agent can market the property using the home inspection. I encourage you and all agents to make this part of your marketing strategy for your clients.

http://www.selmanhomeinspections.com/inspection/seller_home_inspections.htm

Ken, Great post. I like letting them know up front about how you'd like to adjust the price to reflect what the market is dictating if there are no offers and little showings.

We don't ask for price reductions either. We show our clients the marketing activities that have been performed, update market absorption information, new or updated listings that are competing with the subject property and let the client come to the conclusion that if it's not the marketing that needs to be improved, it must be the price!

Ken, great tips.. I already use some of these principles... you are so right... it all comes down to the price in the end.

Have a great day!

I've bookmarked this for the future. Thank you for getting this out to us today.

Patricia/seacoast nh

Great post!

Price it high -watch it die

Price it low, watch it go!

Excellent tips Ken! Bookmarked to share and for future reference. :)

Hi Phillip, Jason, JP, Bill, Michael, Jeff and Grace, Russel, Lana, Vince, Barb, Brent, Jim, David, Eric, Weichert, Gloria, Patricia, Marygrace, and Lola. Thanks for stopping in.

This has been quite an active post for sure...

Yes, pricing right first is best. In reality I find that hard to do. And again, I have been surprised occasionally that a home will sell for more than I thought. I don't mind a seller fishing a bit. I would probably too...

I don't find seller concessions as effective as price reductions. My buyers are looking in a certain price range. Often times a reduction will move a home into a new price range where it will get purchased.

Thanks again everyone!

Ken

Great post Ken. I have it in my listing presentation. All the things that will transpire and what I commit to and also a time-line of our time to sit down to "Have the talk".

Although I like to price my listings where I want them, it can't be helped sometimes to start out where they want.

Excellent post and I like #1 the BEST ... "Have a pricing reduction system and explain it to your clients up front" ..... I need to have this in my listing presentation, it will spare alot of work later on down the road! pippa

Keep them educated--that is the key!

Keep them in the loop no matter what. Don't forget to communicate.

A very nice post... And I think it is imperative to have a pricing plan. It really is the KEY to a successful marketing campaign.

I have used this system for years. And, when it doesn't work, I gently"fire" the client. They know they aren't motivated, I know they are motivated. And we are both wasting time and energy. Better to know sooner rather than later.

Great Post! Like some of the other posters, I prepare them up front that we will re-evaluate the price with in 3 weeks if we havent gotten an offer. If we have had a number of showings with no offers I go for a 5% reduction. If we have had it up for 3 weeks with barely any showings I go for a 10% reduction.

Alot of times people want to take off a thousand here and there and just peck away at the price. But I always warn them of the consequences of this.

The only thing I might add is to schedule a tour to show them the compitition

I don't usually ask for a reduction outright. I show them a combination of showing history and comps. They come up with the need for a reduction on their own.

Great post on a subject that I have never dealt with effectively. Price reductions. I never seem to win those battles.

JUL

2010

I love how you calculate the number of showings w/o offers, number of showings expected per week. I do the other things but sellers don't always get it. By systematizing it, it makes it seems so scientific. Do you mind if I shamelessly steal this idea?

Why don't you just price it right in the first place? DUH!

Stop buying the listing. That is another thing that makes real estate "professionals" look like idiots and thieves.

Great ideas. I like bringing the price reduction form to leave with the sellers. Always a good idea to let them read what they would be signing. This may also, I believe, make them a little more realistic in pricing. I have followed the others, but as you say, they make the final decision. I don't use pressure, either. I don't like to brow-beat them into a price reduction. I just had a listing, and my clients asked me to do a price reduction.

Thanks for the great post :)

Betty Bart

Fine Homes in 905

Ken - Excellent points regarding price reduction tips that should be used by many agents.

Ken, having spent most of my career focusing on pricing in seminars and my consumer pricing video, I'm glad to see you drawing attention to this. I'll add another tip.

You are properly saying to give Feedback, not Advice. That is, you tell them what "is", they say what to "do" about it so it's their decision. So when my wife says "it's getting pretty hot in here," she wants me to turn on the AC.

A good setup for this in a price reduction meeting is to bring and actual medical X-ray and show it to the sellers. Mr. and Mrs. Seller, would you be angry with the radiologist for showing you the break in your leg? No, you're just being presented with a fact. It's your decision how to treat it.

Well my CMA is the X-ray of the market...just showing you the facts. It's up to you how to respond to this. Do you want to Sell or Stay?

By the way, you can now email my Pricing Video for online viewing.

Hi Ken, Pippa, Erica, Joan, Suzanne, Ryan, Ron, Richard, Ann, Kathryn, Fred, and Betty. Thanks for reading.

This post has some legs!:)

Fred, are you an agent? Probably not...

Kathryn, steal away.

Anne, I try not to ever create "battles" w/ my clients.

Thanks again everyone,

Ken

Ken - Concise, clear, and a phenomenal outline for professionals and consumers alike. My bet is this post will prove timeless.

I always keep my sellers informed of what's going on in the neighborhood and with their "comps". They always know when it's time to reduce the price. Great tips.

Sounds like you have fine tuned this system

Great advice and post! These days the pricing is imperitive to the successful contract pending! There are just too many homes on the market to "test" the waters first!

This is a good strategy... I use many of these techniques, however, I always ask for a price adjustment if the home is not receiving the showing attention required to sell, and if it is receiving lots of showing traffic and no offers, then I am still ASKING for a price adjustment, but this ASKING is done by sitting down with the client and going through a factual presentation backed up with market feedback in the form of Internet hits, video views, showing feedback from agents, recent news that is impacting the market, obviously new competing listings and recent sales, etc. I sell most listings in 7 to 10 days for 99% to 101% of the asking price, and with multiple offers 90% of the time. I learned a long time ago, never be affraid of your Seller, and don't take the blame for a house not being sold, unless it is your fault, ALWAYS blame the Market.

Great thoughts that are very relevant in todays market. If you don't have a plan you will end up with an expired listing and a unsatisfied client. Best to be clear on the importance of pricing upfront.

Thanks,

Jeremy

Ken, Great post, I do many of these thing as well with great success. I think keeping your seller informed via new listings, price reductions, etc is really important. They now feel part of the selling process and that is what leads to sales and effortless price reductions!

Great tips Ken. Absolutely the way to do it. Especially where the seller brings it up themselves.

Great advise, Ken. I like the "Post your thoughts on pricing" approach!

Ken,

If you do let the seller test the market by setting a price higher than your recommendation, you will necessarily age your own listing. At that point, when the seller decides to lower their price, you will have to go below what you would have initially priced the home for. It is kind of like getting a listing that was previously listed. I believe it is bad for everyone to let the client decide on the price if it means taking an overpriced listing. IMHO.

Thanks for posting this important information.

Great Post! I currently am working with a buyer that needs her current home sold before she can buy. Her home has been listed 3 months with no price reductions - she told me yesterday she has requested her listing agent (the buyer currently lives in another state and is relocating to FL) to reduce the price 2 times and the listing agent still hasn't done so. I was totally shocked! She said she is now going to tell the listing agent in no uncertain terms to reduce the price and get the home sold.

Thank you so much for the article. I will definitely use your tips to have my clients adjust their listing price. Do you have any tips on listings that aren't in your typical neighborhoods and with only 1 or two comparable properties or none?
Thanks,
Lydia

great points. the only thing that i personally have done differently over the past 28 years is to suggest a price reduction in a passive manner, as I feel it is my obligation to my fiduciary responsibility to make sure that they understand they are not "in the market". I do this by saying that the market is not accepting your home based on where it is priced. It is time to change to what the market is desiring. You tell me if you want it done this week or next.

Very good post. Educating the buyer is the best way to get a price reduction. If you have educated them and it is not selling they cannot really blame you.

Some great tips here I will definitely be using this tips to help adjust some listing prices

Great suggestions about showing sellers how many people have "seen" their listing online and letting the request a price reduction from you instead of visa versa.

Great suggestions on pricing.

Jerry Gray CRB,CRS,GRI,SFR / Allen Tate Realtors / Winston Salem, NC / 336-918-2433

Good List, I will visit this often. Thank You

Having a syste in place is great! I try at all cost to avoid overpricing a listing. When there is no other choice, I ask for a yea r+ listing agreement and higher percentage commission. Sometimes you have to be willing to walk away as well!

Amazing how only a few Realtors disagree with your planned pricing reduction. I too disagree and if priced correctly, I've experienced an increase with multiple offers and ultimately a timely sale.

Taking a listing that's over priced just to have a listing regardless of circumstances distorts the perception of the real estate industry as simply a commodity business that can be performed by anybody, so the value of being a Realtor as a professional is viewed as immaterial.

Ken, unfortunately some properties are priced high and looking to go lower over time or with Buyer offers. Pricing realistically is so important. Good list.

Loved the comment by Marygrace on pricing it high it will die, pricing it low, it will go! Glad to see you discussing something that is effecting all of us in this Buyer's Market. But like you said, if we price it right in the beginning, we're less likely to have to even reduce it which is a wonderful place to be for all parties! Thanks for the post!

Great Info for the today's market, that is what I also do, tell the truth before you even start, we may loos a listing or two. Later they will see that you were the honest REALTOR.

Good job and tanks.

Grat post - educating your sellers and having a system you follow are both activities that will make your work easier.

Hi Timo, Gina, Michael, Kimo, Bret, PA, Jerry, Jenny, Jennifer, Gene, Tim, Terry, Dean, Michelle, Gabe, Steve, Jeremy, James, Dawn, Tina, Linda, and Jason. Thanks for commenting!

I had a Timo and a Kimo comment on my post. That has never happened before!

Wow, so many nice things said...

Lydia, good question. Obviously the more comps the better. If I had few or none, I would still focus on the system. The property should be sold/seen a certain number of times. No traffic or no offers, and the property is overpriced...

Yes it would be great if every home was priced right in the beginning. But I live in reality. This doesn't always happen. So I use a strategy to resolve this...

Willing to walk away is another good tip. Was on the list but it got pushed off...

Kimo, you write "the value of being a Realtor as a professional is viewed as immaterial." I never hear customers say this. Why do we as agents keep talking about this?

Anyway, thanks again everyone!

Ken

I prepare sellers up front for price reductions using the mantra: "if we don't get an offer in 3-6 weeks, (the choice is their's depending on motivation) a 3-5% price reduction should be in order"). I also throw in other examples (no showings - price reduction, many showings and no offers - price reduction). After communicating feedback with them and market activity, I do ask for a price reduction (actually, I suggest it). It doesn't have to be a percentage, in our price range a $5,000 reduction usually brings new showings.

I've listed expireds where the seller told me their prior agent never asked for a price reduction and they expected the agent to do so if that is what should have been done. IOW, they felt their agent didn't do their job by not asking (or suggesting).

Great post, I have a somewhat like set up as well. If the seller really wants to try the higher end price then I will grant them that but only for a set amount of time. If after that timeline has come and gone and nothing has happened, then we make the needed change of where I believe the price point should be. Also the internet traffic and when you see it is high, yet no one is showing the home in person then you know your home is being used against you in that the other agents are using it to help sell another home. That last line really gets a seller to pay attention and understand that we are not a commodity, but professionals who know and understand todays market.

Great tips except for the worthless Open House.

My thoughts on #9 price reductions: I try to be fairly aggressive with price reductions on listings: the current market is all about price and condition, and I have to be pro-active on reductions or they become stale quick. If sellers are hesitant about getting real on price, then it is wasting my time, money and effort. Plus, the possibility is greater to create multiple offers and actually get a higher price. It is tough enough out there in the Atlanta market with 80% of listings failing because of incorrect pricing! I am trying to watch them in the first 20-30 day period, then reduce.

It's always good to read how other agents handle this and that's why I'm finding Active Rain such a resource of information. Everything you state above is good common sense and I agree completely with #9, it should be obvious to your client when it's time to reduce the price IF you keep them informed throughout the process. Working smarter is always the better option.

Nice tips, I like the system approach to reductions.

Ken ... Thanks for your article on list price reduction tips. I agree that primary factor on whether the home will sell is list pricing and that our clients have that decision. We let our clients know about their making that decision and ask them fill out price and initial that on the listing agreement. We are strong advisors, but our clients make those decisions.

Ken,

Thank you for this excellent post, which I will pass on to my agents.

BUT I do think the Seller Buydown, if marketed properly is being overlooked.

What buyer would not be attracted to "A Financing Stimulus Package For This Property Only" or "Seller Assisted Below Market Financing".

Properly explained, when a seller needs a hook, it has delivered for many agents. Has to be the right property and seller and marketed right.

Vid. explanation with more benefits spelled out here:

http://activerain.com/blogsview/1585422/the-seller-buydown-for-realtors

Thanks again for your great post!

Ken. Thank you so much for this list! I printed it out, hung it on the wall. Great reminders. Though I use some of these items, I am going to revise my package to include all of these. Thanks again!

Thanks for that info. I am a new agent and this is a great stategy. Thanks again.

I incorporate a lot of these tips when I talk with my clients about pricing. I also like to use the absorption rate method to clearly spell out where the house is positioned on the market...pricewise and to demonstrate how long it will take their house to sell. In most cases I like to talk with my seller's right away about price reductions and base future price reductions on the number of showing we receive in a month.

Hi Judy, Ryan, Lyn, Tom, Angela, Bruce, Harrison, Mary Anne, Margaret, Susan and Debbie. Thanks for reading.

I can't believe how many readers this post has had...

Lyn, you made me laugh out loud w/ the open house comment. I was surprised no one mentioned it sooner. I still like them. For me, they serve a few purposes...

Mary Anne, my concerns with the seller buydowns is they aren't often seen. Clients search for homes by price on line (ie. 300-325K). Price changes are also reflected in the MLS...

I understand that a lot of people don't get my #9 tip. I can see that. I could see doing it a more aggressive way, but I would find that unpleasant...

Anyway, thanks again everyone!

Ken

Great list and I will be putting to use those that I currently don't implement today. Thanks for posting.

I agree with Margaret who said she printed it and posted it on her wall.... these are things that need to be forefront in our minds when approaching sellers - long before we are to the "price reduction" stage. thank you for sharing!!

Thanks for the great tips! I was happy to see that I was already implementing half of them regularly. And the most important part is educating our seller clients right from the start so they know exactly what to expect. I always remind every seller that regardless of the "feedback" we get from agents and buyers about why their house hasn't sold yet, that there is nothing wrong with any property that the right price won't fix!

After I've given them my best advice for pricing, (which may be lower than they want, as we are never surprised to find out), I also share my business "philosophy" about setting the sale price on their home. "It's YOUR house, and I'm here to help you get it sold. I've shared with you my best advice on preparing your home, pricing your home, and positioning the market activities to your best advantage, but YOU get to make the decisions...about price, and how long you want your home to be on the market..."

Very interesting post. At Countdown To Buy, we've actually automated the price reduction process (1% per day, though this can be adjusted). And the most interesting thing about this is the results we've had.

In one pilot we had recently with a major bank, they set us up to go head to head with their standard pricing approach splitting properties in the same towns across the country to make it an even comparison. These were for newly foreclosed properties.

As an aggregate average we beat their results by about 5% with qualified offers in about 10 days less time. This was better than what even we had expected. But it got better -

On another pilot with a different bank they gave us aged out properties (on the market more than 90 days and in some cases many more days than 90) and the aggregate average for those properties was greater than 90% of last listed price in less than 30 days.

Since these were REO properties it was likely easier to convince a bank to give our platform a try. I can only imagine that it would be much tougher to convince an individual to do so, even if the results are there to prove the case.

Sure makes for an interesting study in psychology though....

How do you get the reports from realtor.com com and tru you are talking about

Thanks

JUL

2010

NO MENTION MADE ABOUT ALLOWING BROKERS TO TOUR THE LISTING AND RECEIVE THAT VITAL 3RD PARTY OPINION OF VALUE. THIS IS HUGE FOR THOSE NOT LIKING TO "BREAK THE NEWS" AFTER TAKING AN OVER-PROCED HOME! LIKED THE IDEA OF SETTING UP A NEIGHBORHOOD SEARCH. THANKL YOU

I'm with the automatic reduction camp at the time of listing contract rather than the other stuff.

You have an excellent plan Ken, thanks for sharing with the rest of us.

Aloha from KW in Hawaii

Great post. I will be sharing this with members of my office.

Your approach is a great way to educate the client. We all know a big part of our job is to educate our clients.

Great Post! The key is to educate our buyers ans sellers. It makes the entire process a much better experience.

Hi Gary, Mari, Lisa, Pete, Mike, Joe, Mike, Richard, Pam, Jim, and Alex. Thanks for reading.

Happy Sunday morning!

It sounds like some have advanced plans in place. Cool.

I am happy so many are enjoying some or all of this post...

Lisa, I love the topic of feedback. Sellers always want it. Price fixes a lot of problems!

Mike, have you set up a Trulia profile? If not, you should. As you do it, it should become clear. If you need more help, call or email me anytime...

Thanks again everyone,

Ken

I'm going to start doing some of those things now!!!

Great post! I like all of your points, and I try to establish price reduction strategy at listing time too, but I'm more experienced with buyers than sellers, so reading all of the comments really helps me. I send my sellers weekly updates - whether it's from Trulia or Realtor.com or just sending them the comps -- that way they know I havent just listed their home and forgotten them. Thanks!

Wow , you sure hit a homerun with this HOt Topic, great post and I too like how you have tied in the number of showings to calculate price reduction timing. ALWAYS easier to address this up front!

Thanks for sharing

Wow , you sure hit a homerun with this HOt Topic, great post and I too like how you have tied in the number of showings to calculate price reduction timing. ALWAYS easier to address this up front!

Thanks for sharing

Thank you for this...much appreciated by a newbee such as myself.

Great post! I'm going to share this with my Realtor friends...I know price reduction strategies have been an important topic lately. While I understand the other mortage people's idea behind the "seller paid buydown," I agree with your point that if it's not the way people search for it, it doesn't do much good to offer it.

An overpriced listing is sort of like a mortgage person advertising a 1/2% higher in rate than all his/her competitors and wondering why nobody is stopping by to talk to them...if you're within an 1/8th, you can at least start a conversation and people will see that the lowest advertised rate usually isn't the best deal, service, expertise, etc....just like the lowest priced home is usually lowest because of condition, location, etc., but the buyer still wants to see it first...the key is to position yourself as "next in line," as Harvey Mackay says.

Ken,

Good plan for staying in control, without being controlling.

As always, thanks for your contributions.

Nice points. I would have to say, #1, should be to fight for a realistic price from the start so you don't have to battle price reductions. You miss out on the critical opening period when the listing is fresh and new. Often times buyers won't come back to your house if you were overpriced to start with.

I do a lot of these so I enjoyed running through your checklist. It's a reblog, for me, too!

Ken, I agree with Sardi that this will be a timeless post. Definitely bookmarking for future reference and my fav is also #3! :) We were just talking about this one in sales meeting last week.

Ken, Great post with relevant points. I think educating the sellers up front is the best thing we can do. When they've had 3 weeks with one or 2 showings, they call me because they know they aren't generating enough interest to get an offer. Wonderful advice.

Hi Amy, Roberta, John, Karl, Brett, Bob, Scott, Cheryl, Frank and Matt. Wow. Thanks for reading.

In the body of the post I predicted 1000 reads. I have just past 3000, along w/ 18 reblogs...

I am blown away.

Wow. Another timeless comment...

Scott, you bring up two words I avoid. Fight and battle. I don't want to do either with my clients...

Thanks again everyone,

Ken

great post Ken,

we also discuss when we will be taking reductions at our listing appointment. Always set expectations up front. Have a great week!

Lisa aka Allstarmom3 (twitter)

JUL

2010

Hi Lisa. Thanks for reading and reblogging.

Lots of work to do this week!

Ken

Ken, I think by bringing up the price reduction possibility at time of listing is important and necessary as it sets the stage of who is the professional and sometimes proves the seller's motivation.

Ken!

Terrific post... I've done something similar for years. This past year I advised a client "you get 30 days" and "I get 30 days" on pricing - so we could run an experiment. They had the 1st 30 days - NO offers, they overpriced. I underpriced and received 4 offers - one with over $150K down, and sold the house $50K over asking in a down market. They understood immediately as the offers came in why my method was more successful. Some of our clients are from the "show me" state. This is a way I allow them to do what they think is best 1st.

I love the post - thank you for sharing what works for you!

This is a great list - thanks!

Great post and excellent ideas. Thanks for the info

Awesome, I'm new and you all just saved my sanity on how to help my sellers! Thanks so much..

JUL

2010

Hey Ken,

Great Post on a HOT TOPIC!

Being a Home Stager, I like that you opened by saying a property should be "staged correctly"... but that is often not the case. Many realtors still hesitate to bring in a professional Home Stager, thinking they can "Stage" a listing themselves...or homeowners think a few hours in front of HGTV made them "Do It Yourself" experts, yet the cost of a professional Home Staging is always less than the cost of the first (and subsequent) price reductions. I've seen too many open houses with "Do it Yourself" staging that "Show well" but is so obvious to me, none were professionally Staged, and sadly even after leaving my card with the realtor I will drive past a few weeks later to see the big "Price Reduction" Sign hanging out front. Too Bad.

I'd love for more Realtors to realise the difference "Staged" and "Professionally Staged" can be.

Hi Ty, Valerie, Bill, Woody, Roseanne, and Chris. Thanks for reading.

It sounds like many agents already have solid systems in place to get reductions in advance. That is great.

I am still amazed how many time this post is getting read. Even several days later...

Thanks again everyone!

Ken

Ken- Have you ever had any problems with sellers who are not happy about #2- seeing a listing modification form, up front, before you even list the property? It almost makes it seem like you already have no confidence in getting the listing sold at that listing price, and are already preparing the sellers for failure.

Although I understand the need for preparedness, I think showing a seller a listing modification form in the beginning and telling them that there is a possibility they will have to reduce their price would not instill confidence in their brokers ability to get the job done. At least not in my market, this would go over very poorly.

However, there are occasions where the broker knows that the listing is overpriced, or will have much difficulty in selling, and at that point, it is good to prepare the sellers for reality...a price reduction, so they are not surprised later on.

These are excellent tips. We should all have a similar system!

No blog ever dies on the Rain. They spring back to life through reblogging. And, you will get your just reward for this one. Very well-written.

JUL

2010

Hi Rose, Nicole and Don. Thanks for reading.

Rose, I have never had a problem. I believe it is in the presentation...

Thanks again,

Ken

JUL

2010

Ken,

What do u do when it a good listing in great condition, started out at a low price because the client just want to get rid of it and there are no calls on the property? Thousands below assessed value and still dead in the water. Could it be priced so low that they just assume something is wrong with it; structuraly or something else? At a listing price of $162,000 for a 3 Br, 1 Ba on the Cape. I am lost for what to do with it now.

Deanna

JUL

2010

OK, I'll bite...how is it your clients ask YOU for the price reduction?

Hi Deanna and Michelle. Thanks for reading.

Deanna, if no one is calling or looking, it is still overpriced...

Michelle, if I do everything right (including steps 1-10), my client understands the role pricing plays in getting a home sold. Sometimes it takes time, but they usually come around to the reality of the situation and lower the price...

Thanks again,

Ken

JUL

2010

I enjoyed reading your post. We follow a lot of your values Ken.

It's my job here to do marketing for our customer's properties. I put a great deal of time and effort into making sure each property is advertised in as many places as possible and then I send reports out to our customers so they see their results of how many hits their property have had. I know the market isn't as good as it was 4-5 years ago, so that's why it's more important than ever that we show our customers how hard we are working to sell their properties.

JUL

2010

Hi Bobi. Thanks.

There is so much we do that customers don't ever know about...

Alpine Lakes? Sounds beautiful...

Thanks again,

Ken

AUG

2010

These are great tips. It is so important in this market to price properties correctly so that they will sell!

AUG

2010

Great read Ken! Thank you!

AUG

2010

Ken, great tips! I love #3! That is a great idea to keep them informed of what's happening in their area! Nice post!

JUL

Ken...all good tips to keep the sellers in the loop regarding correct pricing. It is imperative these days to educate the clients up front.

JUL

I think your approach is very good. Thanks for a great post. Having educated sellers is always a plus.

JUL

Hi Gene, Ann, Don, Herman and Sybil. Thanks!

Good to get some activity on an older post...

Price em right. Get em sold!

:)

Thanks again,

AUG

Great tips Ken... Love your positive, proactive, upfront approach. My rule is 10 showings or 30 days, whichever comes first! Keep up the good work!

AUG

Hi Jack. Thanks!

JAN

great post ken, i always love when clients ask to drop the price

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Ken Tracy Naperville Illinois Real Estate

Naperville, IL

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Keller Williams Infinity - Naperville

Address: Naperville, Lisle, Plainfield, Aurora, Downers Grove, Wheaton, Glen Ellyn

Cell Phone: (630) 697-0536

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