“Mr. /Mrs. Seller… your house is overpriced and you need to drop it by $50,000″…
OUCH that hurt!
This is one of the conversations we all hate having, but it’s going to come up sooner or later on one of your listings.
So what’s the best way to ask your seller about a price change?
How do you ask for a price change without turning your client against you? If you don’t think sellers get irritated when you ask for a price change you are wrong. Whether or not they turn that irritation into hate is another story, but this is how you can make the best out of an uncomfortable situation.
Set Expectations From The Beginning
Avoiding an uncomfortable situation is always about setting expectations. We know that
ALL most sellers think their house is worth more than what it actually is, so set expectations up front. Nine times out of ten, your sellers are going to want to list higher than you suggest. This is why we always present a pre-planned pricing strategy should the initial offer price not receive enough traction.
Doing it this way allows you to test the market to please the seller (I Told You So), but at the same time make price adjustments necessary without accumulating too much market time.
What Is A Pre-Planned Pricing Strategy?
This video is taken from my “Attraction Marketing” Boot Camp
Have A Real Marketing Plan That’s More Than An MLS Listing & Sign In Yard
The knee jerk reaction to a stale listing is typically that you are not marketing the property well enough. This is another reason you need to do more than the average agent for your listings. If you have a good listing marketing plan and your seller knows everything you are doing up front you will avoid this conversation altogether. Sellers will blame your marketing when showings are not happening.
Sellers cannot blame the marketing because we have a REAL MARKETING PLAN for all our listings and the seller knows the details upfront. You want to accomplish this in the listing presentation and by sending all your marketing materials to your sellers so they can see everything you are doing to market their home. During that first week on the market and at the listing presentation I make sure the seller knows how many showings we should be having and what it means when things are slow. It’s my job to make sure the seller knows that the market will tell us if we are over priced or not.
When you implement a pre-planned pricing strategy, you set the rules of engagement up front. Everyone wants to test the market and I don’t blame them, but it’s your job to let them know that “testing” the market for too long will end up biting them in the ass if they DO NOT TAKE YOUR ADVICE.
I tell every seller this…
“I do not create the market, I just play within it. When it tells us what it’s doing we must listen to it or it will bite us in the ass later. I can get your property in front of thousands of potential buyers, but if people are not inquiring 9 times out of 10 it’s price”
It’s crucial you talk about the importance of market time for your property. It’s our job to educate sellers about what market time does to a listing. Check out this article if you want to know more about market time.
The more market time you have the more negotiable you appear. I like to tell my sellers this;
“When we are shopping for a new home and we see a property you like with a lot of market time we are going to low ball them. You don’t want to put yourself in that position as a seller because it will burn you in the long run.”
You are not talking anyone into a sale you are showing them how to walk away with a higher price and although your price change may not be what they want to hear, it’s in their best interest because the market doesn’t lie.
Once your seller understands the importance of market time, it’s important that your pricing strategy match up to how consumers search online for properties. Online search is where all the action takes place. Consumers search for properties in $25,000-$50,000 increments because that’s how all the search engines work.
So if you play your cards right, you should only have to do one price change if any at all because that price change should be into a $25,000 increment to reposition the listing to a new audience who was not previously seeing it.
I listen to what the market tells me and recommend a price change based on our activity. Here is a good guideline to follow although not set in stone:
5+ Showings a week no offers and listed for 3+ weeks ($184,900 List Price)
This means you are usually very close in what the market is willing to pay. Usually a small price change is needed.
3-5 Showings a week no offers and listed for 3+ weeks ($184,900 List Price)
Price change into a $25,000 increment. For Example: 174,900 vs. $179,900.
Less Than 2 showing a week no offers for 3+ weeks ($184,900 List Price)
You need a much bigger price change and need to do more than an incremental shift. For Example: $159,900 vs. $174,900
Now that you have a pre-planned pricing strategy set up (hopefully you don’t need to use it), now let’s show them the data.
Backing Your Request With Facts
This only works when you have a real marketing plan in effect because the first thing your sellers will say is that you are not marketing their home enough. You are going to show them through your marketing efforts how much exposure their home is receiving through sharing the data.
Use the tools that are available to you to justify your price change request. This is an image from Trulia that shows the seller how many page views they had. You can also use the listing report features of Zillow to show them additional stats.
This report is from Realtor.com. You can do the same thing with the four major search engines (Trulia, Zillow, Realtor, Homes.com).
You cannot force people to come and see the property. Our job is to make sure they see it. This is like taking the scientific approach to marketing your listings.
Facebook ads are another way to drive very targeted traffic to your listings if you know how to use it the right way. You can also send out postcards and other traditional forms of marketing. There are a few other avenues of listing marketing you can be doing, but that’s another can of worms. If you would like to know more about a listing marketing plan, then check out the REAL MARKETING PLAN article.
Here’s the point. When you have a plan up front that is pre-determined and you implement a Real Marketing Plan that consists of more than popping a sign in front and putting it on the MLS, the numbers WILL NOT LIE. Taking this approach to asking a seller for a price change is logical, statistical, and they will respect you more for it. All you are doing at this point is relaying the facts and helping them make a wise decision.
Real estate is not a hard business, but it’s a hustle business. The question you should ask yourself is if you feel like you are in the right hustle?
Check out the links on this post and please comment below. I would love to hear from you.
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