There are fewer things in the real estate business that are more frustrating than working with a seller who has a perfectly good listing but a price that is unreasonably high. This time of year, with the busiest months for homes sales fading quickly into the rearview mirror, it is more urgent than ever to convince sellers to be smart about pricing.
Here are three strategies to help you do that in order to get better sales results, prove your value to sellers, and avoid losing clients who blame you when their house languishes on the market for months and months.
#1 Schedule Price Resets When Taking the Listing
• Before you ever accept a listing, make sure it is reasonably priced. Otherwise you can work hard and never succeed at closing a sale and earning a commission, because buyers will just go elsewhere in search of a comparable home at a better price.
• That can damage your reputation and brand and cost you future business. So don’t fool yourself into thinking that getting the listing at any cost is a measure of success. Realtors who accept overpriced listings actually hurt themselves and do a disservice to the seller.
• If the seller wants to fish for a higher price, fine. But take out a calendar and mark two or three week intervals. Get the seller to agree that if the home has not gotten any serious offers by those benchmarks, they will lower the price by a certain amount.
• That prepares them for the eventuality that they may need to lower it to attract a qualified buyer. It also protects you from being accused by the seller of not doing your job, because you already informed them of this strategy and got their agreement ahead of time
#2 Clearly Convey the Cost of Overpricing the Property
• You also have an obligation to be straightforward with sellers who are misinformed about pricing or are just too emotionally or psychologically attached to getting a certain price.
• Print out good “comps” and show them data on recently closed homes that are similar to theirs. Educate them about the reasons why pricing is about market dynamics, and show them the range of prices – from low, to medium, to high- that homes like theirs are selling for right now.
• But this time of year you should take it a step further by also compiling data, based on the last 12 to 24 months of utility bills, to show them how much extra it will cost them to heat their home this winter. Add to that the cost of taxes, insurance, and maintenance. That gives them a more realistic picture of the net cost of holding out for a higher price.
• If they face expenses totaling $8,000 just because the home is priced too high and won’t sell over the sluggish winter season, then explain the logic. By lowering their asking price $5,000 to help facilitate a quick sale, for example, they actually save $3,000.
#3 Strike a Mutually Beneficial Bargain
• Discounting your commission should be a last resort. But sometimes it is the smartest option if you find yourself stuck with an overpriced listing that is more work than it is worth. Selling and putting it behind lets you move on and focus on new listings, plus the buyer and seller will both be happy and recommend you to their friends and colleagues.
• Nobody likes to compromise on their paycheck, but if lowering your share of the commission helps to close the sale successfully then you have cut your losses. You are free to invest in a new, better-structured deal with a more compliant and financially savvy home seller.
• Keep in mind, though, that the only way to make this last-resort tactic worthwhile is if you learn from it and don’t repeat the same mistake in the future. Then you can chalk it up to tuition for lessons learned in the business that will pay off for years to come.
• If you wind up with a difficult listing or client, it almost always comes down to pricing. When you find yourself in that situation go back to step one. Prepare the seller before accepting the listing with education and insight, so that they do not make the blunder of pricing their home out of the market.