I’ve heard agents say that it doesn’t make sense to waste your time on listings that are over-priced. They would much rather be the second or third agent to get a listing that has expired so they don’t have to waste valuable time and money on stubborn sellers.
There are two problems with this strategy:
- If another agent gets the listing and knows how to get price reductions, there won’t be a “next time” for you.
- It isn’t practical, or respectful of human behavior, to expect the seller to give up tens or even hundreds of thousands of dollars in one brief meeting with you. If you expect a seller to do this, you’re not being sensitive to how difficult it is to accept that money a seller thought was there, never really was.
A key rule in education states that, “people learn through spaced-repetition.” This means that you should really plan on securing price reductions through multiple communications conducted over time. Every agent should remember that in a seller’s mind, they haven’t really lost the money until they agree with you!
Agents complain that another agent misled the sellers into thinking their house is worth more than it’s really worth. They argue that this isn’t ethical. In reality, a seller who chooses to start high is applying a strategy. You can apply the key Metamorphosis principal, ISIT; Identify, Strategize, Implement, Track.
If you allow the seller the courtesy of trying it their way and it doesn’t work when their strategy is implemented and success or failure tracked, we can much more easily argue that the price needs adjusting. You, as an agent just saying it, doesn’t make it so. But, you as an expert tracking the results, can lead to the only logical answer, which is to price reduce.
Also, remember the realistic market price is obvious to you as an expert because you’re exposed to pricing issues every day. Your seller probably hasn’t had all the market exposure and experience that would allow him to see the logic in your analysis.
So, instead of demanding that your sellers reduce the price immediately, roll-out a campaign that tracks the results of a strategy and offer revisions to the strategy. The definition of insanity can be shared with your sellers. Nobody should do the same thing over and over again, and expect different results.
Here is an example of a strong price reduction campaign when the home is priced too high.
- Let the seller know that you’ll be tracking the success of you strategy.
- Let the seller know that you’ll be tracking the feedback you receive and share it with them. This is a valuable tool to use.
- Look at the comparable sales in the market and share them with the seller. Let them give you what they think is a reasonable price.
- Hold your house open for a company caravan and share the over-priced comments with your seller in writing.
- Have a Broker Open and do the same thing. Be sure to give all of this feedback to your sellers. Remind your seller that 90% of the time other agents bring the buyers to a listing that sells. If all other agents feel the property is over-priced, your seller may lose this valuable ally.
- Conduct Open Houses– Pay careful attention to the feedback of prospective buyers and share it with your seller.
- Track responses from showings- if buyers think it’s overpriced and are making offers on other houses, be sure to let your sellers know their property may be being used as a sell-against for other listings.
- Offers– If offers are low, this is another sign the home may be over-priced. It’s also good to let your seller’s know that the first offer is usually the best one.
- New Closings– Check the closing prices of comparable properties that have sold. They are more evidence of an excessive price.
- Economic and Real Estate National & Local Trends- can also be a guide as to what prices are doing and should be shared.
At some point, during the process, if all of the data is tracked in writing, the evidence becomes overwhelming and the seller is likely to be more realistic. This approach may be more work, but it is much more respectful of the sellers psyche and predicament.