Has the market changed significantly since you recommended the price we listed at? Great question in South Florida when prices have dropped a whopping 7% since the beginning of the year. Sellers have to price the property at market price or face further reductions down the line.
I have a friend who listed her house with one of the top agents in her area. They went on the market about two months ago, at the exact price the agent recommended and supported with his market analysis. Showings were brisk at first, then trickled off, as typically happens. Feedback has been generally positive, although the home is rather unique and simply not practical for many buyers, and the feedback has reflected that.
A few weeks ago, out of the blue, the agent recommended a $50,000 price reduction. This caught my seller friend by surprise since the feedback she'd received never mentioned that pricing was an issue; most of the negative feedback centered on the unique features of the home that made it "not work" for the buyer. But no one, to her knowledge, had mentioned price as an obstacle. My friend asked the agent for an explanation of his recommendation, but no explanation cometh, the agent simply reiterated his recommendation that she reduce her price.
My friend came to me for advice. I suggested she ask him the following questions as to the WHY of his recommendation:
- Has there been consistent feedback that we are overpriced? (If so, it has not been shared with us.)
- How is the overall market right now? Is anything in our price range selling? Is the market typically slower this time of year?
- If the market is not interested in our home at the current price, would your recommended price reduction change that?
- Will reducing the price by $50,000 overcome buyer's objections to the unique character of the home, or will buyers still expect a more traditional home?
- Are homes in your recommended price range getting more activity than homes in our current range?
and the kicker...
6. Has the market changed significantly since you recommended the price we listed at?
My friend is not categorically opposed to reducing her price if that's the right answer, or to withdraw the home from the market and wait for a better time to sell. But she wants (and deserves) information. A coherent explanation. Some evidence that her agent (who is supposed to be looking out for her best interests) put a little effort and thought into her situation -- and his recommendation.
Contrary to what we like to believe, our sellers are not stupid and they aren't unreasonably stubborn. But when we recommend a list price, back it up with data, and then, like clockwork, push for a reduction to that price six weeks later without explanation or exploration of other solutions, home-sellers have every right to be frustrated with us and to question our credibility. To doubt our commitment to their best interests. Or perhaps, to reach the conclusion that we're just lazy.
(My friend is thinking all these things about her agent and I can't blame her).
The moral of the story... before you recommend a price reduction, make sure you have answers to all the questions YOU would ask if it were YOUR home on the market and your agent advised you to give up a chunk of your equity. DO your homework, not just to pacify the seller, but also to determine if, indeed, a price reduction is the right solution. Maybe it is, maybe it's not. But be a PROFESSIONAL real estate agent and find out.
Oh, and it wouldn't hurt to price it right in the first place.
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