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Sellers are not stupid!

"Broker Bryant, How much do you think our home is worth?" "Well, Mr. Need T. Sell, I think you house is worth about $260,000. However, I'm not here to tell you what your house is worth, I'm here to tell you how much your house will sell for. In my opinion, I think we should Range Price your property from $239,000 to $259,000 trying to sell as close to $250,000 as possible." He says in shock, "Broker Bryant, are you crazy? I just had it appraised 6 months ago and it appraised at $275,000! There is no way I am giving my house away at $250,000."

Now being the "good looking" Realtor that I am, I respond, "Mr. Need T. Sell, you have been on the market for 6 months priced at $265,000 and told me you have not had a single showing, how has that been working out for you?" He looks at me sternly and says, "Broker Bryant, the reason our house didn't sell was because our Realtor didn't do any thing. We asked her to run an ad in the paper and she never did. All she did was put up a sign and put our home in the MLS. You can't sell a house like that. I don't know how they ever sell a house. All she ever did was call us every month and tell us to reduce the price, that's the only time we ever heard from her. She's the one that said she could sell our house at $265,000."

"Now, Mr. Need T. Sell, how did you come up with the $265,000 price to begin with? Did your Realtor go over an analysis with you?" He answered, "We told her that's what we wanted and she said OK. She actually tried to get us to price it at $275,000 but we knew we wouldn't get that much for it. We just need to sell."

"Well, Mr. Need T. Sell, today is your lucky day. I'm here to tell you that I will get your home sold. The only thing we need to figure out, is for how much and how long it will take. Let's have a seat and I will go over some info with you and together we will try and figure this out. I know you need to sell and frankly my wife is very expensive and I need to sell your house. So we both want the same thing. So let's see what we can do to satisfy you and my wife."

"OK, so here are the details on the recent sales in your area. As you can see, most homes similar to yours are selling between $239,000 and $255,000, also you can see that here are 50 homes like yours on the market from a low price of $239,900 all the way up to $275,000. Quite the spread. Now if you look here you can see that the way your house is priced right now it shows up at number 39 on the list. That means there are 38 houses similar to yours that are priced lower. A Realtor is probably only going to show 10-20 homes to their Buyer so that means yours is not even going to get shown. Which of course you already know since you haven't had any showings in 6 months. Now, by Range Pricing your house from $239,000 to $259,000 and using the low figure as the listing price, your house will now show up number 1 on the list, also we will offer an extra .5% to the selling Realtor. By doing this your house will get shown and we can start getting offers. We should be able to negotiate a selling price in the $250,000 range, maybe a little less maybe a little more. Granted you may be leaving a little money on the table but your house will sell and you can get on with your life. In reality you are still making close to $100,000 on a house you have only owned for 3 years. What a great return. You really made an excellent investment when you bought this house."

"How come our other Realtor didn't tell us this stuff?" I respond, "I don't know, all Realtors do things differently and maybe her way works for some properties but Poinciana is my area and this is what we need to do, to get your home sold. But you knew that. I'm not telling you anything you didn't already know. You watch the news and read the papers and know it's a difficult market. Sellers aren't stupid. You knew what your house would sell for long before I came over. You just needed me to reiterate what you already knew."

"Broker Bryant, I thought we were too high. I sure wish our Realtor would have been a little more forceful with us. We just want to sell and move back to Georgia." Now I close him, "Well we can't change the past. Listen, let's get you up and running right now. Sign here and here and while you are doing that I am going to take some photos and some measurements. Oh, by the way, I need a key. I will have your house on the market before end of business today. You can relax now, I will sell this house if it's the last thing I do."

"Broker Bryant, can I have some of your cards, I have a friend down the street that has also been trying to sell" "No problem, here's a stack of them for you, pass them around."

Need I say more? NEXT!

Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 11/29/2006 06:09 PM

Comments (64)

range price, range pricing, listing presentation, educational

64 Comments on Sellers are not stupid!

NOV

2006

"The Lovely Wife Here"

I love it when you say NEXT...

Hubba...Bubba...Does it for me babe! xx

BTW, Linda is under me giving you some love...

That must be because your sooooo good looking!

TLW "The Lovely Wife"...NEXT...Music To My Ears...ROAR!

x o x

hey Candi-go ahead and fake it-with the dialoges you get here, your sellers will be blown away as well! who cares if you're newer in the business? all sellers want is information to decide-and to get the house sold. =) how's that listing going? under contract yet???

XOXO!!! Oh wait... sorry broker bryant.. lol and TLW - What a fantastic point to make. I am printing this out strictly for inspiration. Thank You!

Candi, You know I love you anyway:) Fake it? Probably not. BUT If handled properly you could actually take my dialogue, punch in the right numbers, stand up in front of the sellers and make a big production of reading it. After everyone gets done laughing, you would have won their hearts by pure honesty and humor and would probably get the listing. Trust, honesty and likeability are what folks are looking for in their Realtor. And those things have nothing to do with being new.

Ths was great to read. This has not been my experience with personal Realtors. I wish it were!

I dont know how you manage to be so suave... I, too, will be printing this out. Thanks. I particularly like how you sidestepped the incompetence of the previous Realtor.

"...frankly my wife is very expensive and I need to sell your house." Obviously, you connected with Mr. N.T. Sell on a level he could understand. And had you not quite connected with Mr. Sell, you might have mentioned that if the TLW ain’t happy she might just direct a ROAR in his direction!☺

Jay Merton

Another terrific well written blog but we expect it from you now and you never let us down.

I refer to those 50 active listings as: these are the homes that are NOT selling.

www.HomeRome.com

Question for you BB...Did you say that you can list it in MLS at the low range price as the list price?

I'd love to do that but....

Our company also does Value Range Pricing up here but we have to list at the high range price in MLS with the remarks stating the seller will entertain offers in the range of $xxxx to $xxxx

Your way sounds so much better but we'd be in a pickle up here if a co-broker brought us a full (as listed in MLS) price offer from a ready, willing and able buyer.

I work the Expired market extensively and am of the opinion that my job is to market and advertise the home, the seller's job is to price the home properly. I won't ever fall into the trap of giving a seller a price. I will show them what is going on in their market, recent sales and pendings (NOT actives....they are worthless) and then let them try to get their price for at least 17 days (depending upon their timeframe of wanting/needing to sell).

When I meet with them after the 17 day period, we go through all of the info I have been providing them (showings, hits on the net, advertising, activity in their market) and then from there, change the price as necessary. EVERY seller wants to get the most for their home, so give them a short period to get that price. Then use your knowledge, experience and the market trends to get a realistic price and sell their home!

We all need refresher course from time to time. Thanks for this second reminder Professor!

Very interesting post on value pricing.. we don't see much of it here but the few times I have enocuntered it.. seller never wanted less the top price.. which tended to make my buyers mad.. Your concept of reaching the middle makes much more sense.

Thanks for all the comments.

Margaret, I knew you would like this one:)

Monika, Range Pricing will not work if you have to use the high price as the list price. By doing it that way all you end up with is an overpriced listing. In order to RP properly the true market value must be in the middle. BTW the only one owed a commission if a "willing and able buyer" is provided is the listing agent NOT the selling agent. The listing agreement is between the seller and his agent. The co-broke in the MLS has nothing to do with that. And even if it did, the remarks on a Range Priced property clearly state that the high figure is a full price offer. But every state is different.

Patrick, I have to say, that in 12 years of being in Real Estate, I have never heard a Realtor say "It's the Sellers' job to price the home". But hey, if that works for you then more power to you. However, I am in 100% total disagreement with that statement. Why would actives be useless? Wouldn't you want to know the entire market picture and especially what your competition is? You need to write a post and expand upon your technique. I am an expert at pricing and listing properties, so would really be curious to what you are doing.

Hi Patrick, I need to disagree with your statement that actives are worthless. If you are referring to an escalatiing market then I'd agree with you but if not...

In our area we are in a declining market. Solds are great and we use them all the time but what we have to be worried about in a slow market; the actives are now measured to how long they have been on the market and NOT selling. I believe when listing a home in a declining market the seller must place themselves at the lower end in order to achieve more showings and hopefully more offers. It's a numbers game. The more people to view the home the more chances to sell. In a slow market there are fewer buyers looking.

So I firmly believe that you really need to keep an eye on the actives. I hope this makes some sense.

Thanks Jay

You do it each and every time.. What an Inspiration you are and we are so lucky to have you here.

Thanks and keep them coming!

x o x o x o... I am so proud of you!...TLW...ROAR!

I know you are hunee:) Did I tell you , you look lovely today:) BB

Hey TLW xox was my line! Seriously another great post - they just keep coming!

I hear you BB..but our company which I do not own only allows us to list at the high and the high has to be the at market value, not anything above...Your in the middle list price ...is much better in my opinion.

Our Broker will not allow us to list at anything lower than what we know the seller will take...in MLS... due to the offering of compensation and cooperation.

We make the value range known in writing in the MLS remarks. Obviously the name of the game is getting it shown and getting offers...what the selller does is his option but at least this gives him a chance at having an option.

Thanks

I re-read your range pricing blog from way back and got something more out of it than the first time - funny how that happens (and thanks).

As for this deal, I guess you just made the former REALTOR part of the disappointing customer dissatisfaction statistics.

Monika, If that is the case wouldn't it just make sense to not use RP at all?.

Cheryl, always good to see you. Did you list that restaurant yet?

Jay M., I'm with you on the actives. I need the whole picture. Past and present so I can attempt to predict the future:)

Gabriel, Maybe it's because my writing is so deep and profound:)

Jay L., thanks for reading. I hope it helps you in your business.

Linda, XOXOXO 2 u 2

BB: I've been so busy lately, I've been remiss on posting to my blog. But, you gave me an idea to go dig my "marketing magician" article out of the cave and post it. Watch for it! :-)

Thank you for your input Jay and Bryant. I guess I will go into a little bit more perspective here. First of all, I am in Southern California and we are in a descending market.

First off, I'd like to congratulate you for being an expert in pricing and listing homes!

As far as actives go, "actives" show the seller what is on the market and what they are theoretically competing with. With the current decline in prices, if a home is priced anywhere above the last sale, the home is overpriced. It may even be overpriced if it is priced where an exact model match sold at if it is more than a couple of months ago. What that means to me is that if I am sitting with a seller and they want to know what is on the market and if those prices are at or above and beyond the sale of a comparable unit/home its overpriced and therefore irrelevant!

Here's an example. I recently took a listing for $799K. An identical home sold for $835K about 6 months ago and there is one on the market now for $849,900. The seller says they want to list at $835K since that is the most recent sale and there is another on the market for $849,900. I explained to my client that anyone can ask whatever price they want for their home. That doesn't mean that the home will attract any offers. This is why I say Actives are not important. I will step back from that and clarify my view by saying this: Actives can be used to show a client how long a property has been on the market and not attracted any offers and then suggest they list at a price below that. Other than that, I focus on Backups, Pendings and First Rights of Refusal. These are the only ones that truly matter because these properties were priced in a way that attracted an offer.

Now, let me discuss pricing. I do not feel it is fair for me to walk into someones home and tell them what they should or can sell their home for. I honestly cannot tell you which homes are going to sell and which ones won't sell. I have sold homes for prices I couldn't imagine selling the home for and I have sold others at prices I couldn't believe sold for so little. The market (buyers) determine the price, not me, not the seller. For this reason, like I mentioned before, I give the seller the information of what is going on in their neighborhood and in the market (recent sales and pendings, avg listed vs sold, avg dys on market and total current homes available in their price range) and then ask them, "what would you like to list your home for?"

As soon as I give them a figure, that figure sits in their mind for the rest of the time that we are working together. If I give them a price that is lower than they had in their mind, I have lost and if I give them a price that is too high, I lose credibility. For this reason, I allow them to price their home. Now, if they give me a figure that makes no sense or is outrageous, I use the info that I have shown them (above) try to guide them back to a somewhat realistic figure. That doesn't always work, so I take the listing at their price and let them know that we will know one of 3 things within 17 days: 1) yuo priced your home to receive 1 offer, 2) you priced your home to receive multiple offers or 3) you priced your home to receive no offers. Then at that time, I meet with them again, give them all of the data (which I have already been suppllying for them on a daily basis) and then we make the necessary pricing adjustments to get their home sold.

I undestand this isn't the way most agents are taught and respect that. I also know from past failures that this is the best way that works for me.

sorry, didn't add my name above

Thanks Patrick, It clears things up with me. I agree that it is the seller who makes the decision as to what the price is and our expertise to guide them as to what is realistic or not.

I still think even in your own words actives do play a role in your presentation and are useful to a degree with heavy weight being placed on pendings etc... Just my 2 cents.

Thanks for the lengthy explanation well worth the read.

Thnaks Jay

BB, I must say it really is amazing the way you talk with your clients... I have learned that when you are honest with people, they respect and appreciate that and when you are are being deceitful, they see right through you. I just posted something kinda funny about this...

Patrick, I was confused at the begining when you said you "let the sellers decide the price". I thought, well, if they are deciding the price, then we are not doing our job, but reading your explanation, I realize you are right in a sense. We need to listen to the sellers expectations, but guide them to a realisitc price.

Hi Patrick, Thanks for taking the time to explain your technique. Hey I'm firm believer in doing things out of the box. Actually Range Pricing is also a technique where I am not "narrowing" down to a precise price. However, having sold hundreds of homes in my market, which by the way, is track housing, I can with full confidence tell my sellers what their house will sell for and be within a couple thousand dollars, most of the time. But again my market is a very easy place to price.

I do agree that the market sets the price. I am not pricing based on actives but are including them in my analysis. Why? Because it's pertinent information. If a buyer is looking for a 4 bedroom home and wants a minimum of 1700 sq ft, and my listing has 1800 sq ft, then I need to make sure my listing is the 1st on the list. My only concern when I list a property is to generate showings. That's it. Negotiating a selling price comes later. Range Pricing achieves this by giving more exposure to the property. More showings=more offers=higher selling price in a shorter period of time. So really our goals are the same but achieved by two different techniques. BTW as a reference: I am a solo agent and carry between 20-25 listings and sell between 40-50 houses a year. I do not work with buyers.

Welcome to AR by the way. I will look forwarded to reading your stuff. Different works for me:) I hate that darn box. Way too crowded in there.

Bryant,

I am not a realtor, but I have known the benefits of range pricing and you did a heck of a job showing how well it can work. Excellent post.

BB...you stated "Monika, If that is the case wouldn't it just make sense to not use RP at all?."

Thats what I'm struggling with. But all the agents in my firm that are using it have been very successful..all with the same guidelines as I've outlined. Which is why I am so intrigued by your success with it. Because of the success stories we've heard about it, Jay and I talked to our seller and they agreed to try it. Wish us luck!

A great post and inspiration on how to handle the seller whose house is not moving. The other agent's performance made you look even better! Good job. Your stories are always enlightening. No wonder you are as successful as you are in your area.

great advise as always, but Patrick makes good points also. Market conditions, the sophistication of the seller and types of properties all come into play.

Bryant - loved how you showed the dialogue with the seller. As we discussed before when you introduced me to the concept of range pricing, I actually applied it to a current listing of ours. Since RP has not been used in our area for quite sometime (eventhough we have the option on the MLS system) there was a problem with it and the high price was showing, instead of the low price. This defeated the whole concept of RP and asked for the property to be placed on the low price in the MLS with all the disclosures under description and broker remarks.

I can tell you that I am absolutely surprised that I have not had one single question on RP by anyone showing the property. Could it be that people are afraid to ask what it is about? or could it be that S. Florida agents are really, really smart and I was the only one that had never heard of RP?

Ines, I think the comments in the MLS remarks are pretty self explanatory. Is it working? Are you getting more activity on that listing than you normally would?

Whether one uses range pricing or not, this story is textbook on how to handle sellers during a listing appointment. Once again, I commend you on your writing ability

R&I,

Being in the South Florida area myself, I would bet they are too timid to ask, or possibly a language barrier exists. But then again, you may be doing an exceptional job explaining it as well.

Hi Robert, Many Realtors in my are don't even notice the property is Range Priced. They show houses without bothering to read the remarks. Never quite figured that out. They notice when they go to write an offer. But that's OK with me, by that time the buyer has already seen it and wants it. Let the negotiations begin:) Some Realtors get up set over it. I then have to remind them that hey, you just sold a house why are you upset? If it wasn't RP they may not have even showed it. Go figure.

Adam and Sharon, Thanks for reading. I hope you find some stuff that will help you in your business. That's the whole point.

Nothing much to say here, done it, heard it and always use it! However, I thought I might share with Rick and Ines that even though the higher price is showing, when a realtor is conducting a search based on price, the lower price will automatically show up on the search even though the price is higher than what the realtor put in. It's up to the Realtor at that point to be educated enough to discern that the listing is a value range. And in the meantime, you are reaching many more potential buyers.

Bryant - we are not getting more activity on the listing because the waterfront market is just so unstable here - (we did discuss the idea of RP not working in all markets) which leads me to believe that the range is not correct. We are way below closed sales but not many "comparable properties" so it's not a text book RP. We are meeting with the sellers tomorrow to see how we can remedy this.

Robert - Rick and I are fluent in English and Spanish, so I don't think the language is a problem - I do think that being timid about asking might be the reason. As for Gena, there is a problem w/ the MLS RP system pointed out by the administrator where when you did a search - the property was not appearing, that's why we had to change it to the low range - if not it would have defeated the purpose.

NOV

2006

Tangential to the topic ... in Las Vegas we cannot effectively use range pricing as our MLS requires that the 'List Price' field be the upper end of the range. Is range pricing in use throughout Florida or just certain areas?

I attempted using Price Range pricing about 2 years ago here in Southern California with no success. There were many obsticles. First of all, the Buyers didn't understand it....for many of the reasons discussed above. Second, agents here didn't understand it at all....for the same reason buyers didn't understand it.

In my opinion, it is something that takes education in order to be used properly and to be effective. I think it only will bring success as long as agents understand what it is, how it works and how to explain it to their buyers.

Explaining it to the seller is the easy part. Some of you may have noticed, but Realtor.com now lists "range priced" homes properly. A few years back, it only showed the highest price. Then it only showed the lowest price. Now I think it shows the actual range. The MLS here still only shows the high price on one line screen but shows the whole range on the MLS printout.

Theoretically I think it is a brilliant idea. The problem is getting everyone on board of understanding what it is and how it works.

Now this is a really excellent and informative post! I'm grateful you took the time to detail the issue and at least one potential solution. Thanks for the post!

Good post!!! As realtors, we need to educate our clients. That's part of our business. There are a lot of realtors that take over priced listings just to get the listing. We need to guide them to reach a mutual goal. Thanks for the great post. -Aloha

Yes. You did. Love the comment hijack. You've been hangin with me too much. :))...TLW...ROAR!

John, I'm not sure if RP is used State wide or not. In my area it's fairly common. I was the pioneer of RP in our area 12 years ago. I used to get some pretty nasty calls from Realtors but I stuck with it. Now our MLS supports it in their by-laws and does have a field in the MLS for it. Our MLS states we can use any price within the Range as the list price.

Patrick, you are right education is key. Buyers and sellers seem to be OK with it, it's the Realtors that have the hardest time understanding it. They try to make it to complicated by reading too much into it. Used properly it's an excellent listing and selling tool.

Caron, luckily for me I don't work with Buyers at all. In may market right now we have a tremendous amount of inventory. Even if your search was narrowed down to very precisely meet the buyer's parameters you could have 100 homes show up that are the same model in the same neighborhood. From what I'm hearing from buyers agents they are showing a lot of homes.

Ines, I know south Florida is taking a beating right now. Top end houses must be really hard to sell in this market.

Bryant... I am way late to an early party, so I am not reading the comments... which I usually do.

But.... great point which you have said over and over. And it's funny, I was just speaking to a realtor this morning. And I even brought this up, when he said that it's tough when other realtors will list a house higher than they should, just to get a listing. And I told him to show them charts, the MLS... anything that is on paper...do your homework, etc etc...

Again, great post and yes, being a little firm with the client, but putting it back on them as they knew this already...but you were here just to reinforce this. Smart...

Hi Jeff, You noticed. There is a lot more to this conversation than meets the eye. I am pushing his buttons and guiding him into the decision that he needs to make. And I am reaffirming his position at the same time. But most importantly I am being 100% truthful. Folks deserve no less than that at all times. My job as a sales person is not to manipulate or push but to present info in a way that folks will get it, but at the same time, get what I want, with them feeling good about the decision. I'm not good at too many things but I am a master salesperson(persuader). There I go being truthful again:)

well said.....

But what if we don't have the good looks and charm, Broker Bryant? Good thoughts

Chris, you can do what I do. Hire a stunt double:) You don't really think that picture is me do you?

Bubba...You must be in sales...You can push my button anytime. :0)...TLW...ROAR!

I agree. I also have a client that thinks theirs is worth more and they think they are movitated, but the List Price does not prove it.

Great blog and it is a favorite of mine.

Thanks

Susan, Maybe their house has the "heavy duty nails."

www.homerome.com

Baltimore,Md

Bryant, I know that you are a listing realtor and thought it might be a geat idea if you joined the "Listings by Address" forum. I know that you have a lot of homes for sale so this would be a GREAT place to showcase them for all the Rainers and of course, needless to say the way that AR is so fantastic at getting noticed on the Search engines...fabulous advertising for you. Come on over, we are all anxiously awaiting your listings!!!

It always pays to be honest

DEC

2006

I may have to go the "price range" route on a condo in St. Cloud to appease the seller. It would be the perfect solution. I LOVE your style!

DEC

2006

For a while in Atlanta there was a company doing range pricing. I work mostly with buyers and many of them thought that it was pretty strange. I must agree. So now I understand that the purpose is to expose a home to people interested in lower priced homed. That the seller isn't even considering selling it at the low point of the range makes me think that this is deceptive advertising. Why not have the low point even lower and get more exposure? The game ends when everyone starts range pricing. To me it just creates confusion. I don't think confusion helps the industry in general. Why bother educating people on this system? Just keep things simple. Buyers always assume the list price is already inflated by 10-20K so they are already looking at homes that are priced higher than they want to end up with. Yes, it might get more people to look at your listing. But every buyer that ever saw this pricing scheme thought it was crazy. I think of it as deceptive. Crazy and deceptive isn't what I want associated with Realtors.

DEC

2006

Hey Tim, It really depends on the area. Range Pricing is very common in my area. And really il's not to attract buyers as much as it's to attract Realtors who would not have found the home on an MLS search unless it was Range Priced. That's the advantage. Range Pricing is all about MLS exposure to other Realtors. Does this help?.

You are like a "Guru" of real estate. Nice work!

DEC

2006

Bryant, a beautifully written masterpiece, I just posted it on my Charleston Real Estate Blog, I've got a fun one for you, a listing of mine needed to have the price reduced because of negatively changing market conditions, my stubborn seller said "Mercedes doesn't have to discount their cars in good times or bad to sell them so no, just leave it and someone will make an offer." My response, that's true but unfortunately, your house is not a Mercedes or even a Lexus but rather a GM or a Ford who do need to lower their prices to sell.

Howard, great comeback. And there is an abundance of "Fords" and some are "used".

www.HomeRome.com

Baltimore,Md

APR

2007

"Seller's" may not be stupid.

But that headline sure is.

Lose the apostrophe, dude! (Sellers don't have one.)

Hey grammar police. I know that. I missed it on my edit so thanks for pointing it out. One of the down sides relying on spell check.

Happy Birthday Broker Bryant. I see the grammar police found you on this very special day.

That was so nice of them :)

TLW...ROAR!

FEB

2008

OK that really freaked me out.... great read and I have to say, I have had this very dialog with a client in the past. Stole the words right out of my mouth. The freak me out part was when I read your comments or other's... No one every spells their name with an 'i" "hey, Candi' see below

hey Candi-go ahead and fake it-with the dialoges you get here, your sellers will be blown away as well! who cares if you're newer in the business? all sellers want is information to decide-and to get the house sold. =) how's that listing going? under contract yet???
11/29/2006 06:46 PM by Leigh Brown

Then there is a response, I know I have not been here before or have I? Ok... still searching... 'Gilbert' aka Candace, aka Candi

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