If you have listings that sit on the market too long otherwise or don't sell, you may want to consider your approach to pricing. Here are a few ways to get homes priced right.
Too many homes are sitting on the market today for weeks and months, and while some of that is due to the unique problems associated with distressed property transactions, several of them aren’t moving anywhere because of the uneven relationship between listing prices and actual market value.
Some real estate professionals will argue that their sellers are unrealistic when setting the price of their houses. But frankly, that’s just as much the practitioners’ fault as the sellers’. It’s not as though they’re just passive participants in all of this.
There are four simple ways to be more persuasive on price so that more of their listings sell:
- Before the listing presentation, discover the situation, motivation, and urgency of the sellers. You can accomplish this with prepared questions over the phone, as well as an initial walk-through of the property.
- Do a better job preparing your price recommendations. Drive by not only the subject property but also all the sold, active, pending, and expired properties. Pause at each to make notes that you will reference with the sellers. Call the pending-sale agents. Inspect comparable properties when possible.
- Do a better job presenting your price recommendations. There is language leading up to your presentation of the comparative market analysis, recommending decisions on price. Become confident, practiced, and skilled at each of these.
- Communicate frequently and consistently with the sellers. Do what you say you will do. When the agent serves the sellers with attention and integrity, a visceral, gut-level trust develops between them.
Some Critical Background Beliefs
Real estate pros conduct their business on a set of beliefs, some of which are valid and some of which aren’t. The main reason many of them don’t improve their business skills and income is that they are committed to a faulty set of beliefs.
To become more persuasive on pricing, practitioners need to uncover and remediate flaws in their thinking. Here are a few truths they’ll need to face in order to do that:
- You do not set the price — that is the province of the sellers. It’s your choice to take the listing or not. If an agreement is reached, then you offer a pricing recommendation. The sellers choose the initial asking price and make any later price adjustments based in part on your advice. And that’s to everyone’s benefit. When sellers “own” the price, they’re more cooperative.
- It is not a good price if, after 30 days on the market, the home doesn’t sell. This may seem obvious to some, but for many, it’s the most difficult thing to accept. For instance, let’s say you convince a seller to list a home in December with a price you believe will be good in April. Whether you’re correct about April or not, the price is not good for December, and it doesn’t put you and the seller in a strong position to negotiate down the road.
- Cooperation on price is influenced by the seller’s confidence in your marketing efforts. When that confidence is there and the property still doesn’t sell, the sellers will accept the need for price adjustments. However, through your creativity and hard work, you must show the sellers that no other real estate pro could get them more money for that property.
- Presenting and recommending price is a negotiation — and the better your negotiation skills, the more effective you’ll be on pricing. The first key to negotiating is to get as much information as possible about the people and situation before the negotiation begins.
- With “normal for the neighborhood” properties, you can be certain about pricing on every listing. This does not mean that the seller will go with your recommended price. It means you’re certain about your recommendation.
- With unique listings — such as unusual location, an unconventional layout, or a remarkable property history — there is considerably less certainty about pricing. In these cases, the key is to employ a strategy that continuously tests the price. First, you must get the sellers’ cooperation and agreement on that strategy. This is based on their motivation and urgency, in addition to the market information.
The Agent’s Decision: Answer These Questions
Do you want to be more confident and effective on pricing? What is your greatest weakness on pricing now? Are you willing to make time in the next week or month to strengthen that weakness? If so, do so. The future of your business depends on it.
This has been Reprinted from REALTOR® magazine (REALTOR.org/realtormag http://www.realtor.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.