When the Price is Right, the Property is Almost Sold


 Alexis Bolin  |    February 08, 2012
PriceLRG

In today’s shifting market, many agents are struggling to get their listings sold as prices drop, time on market increases and list-to-sell price ratios take a beating.

Have you ever had a listing expire without selling? Do you ever feel like you will expire before some of your listings sell? Are the average days on the market for your listings in a six-figure category? If you answered “yes” to any of the questions above, you may be due for a pricing refresher.

And here it is! Below are everyday tips to assist you in getting the right price from the very beginning.

1. There is a definite psychology to proper pricing. 

Pricing is both an art and a science that takes knowledge of the market and an innate ability to properly analyze sales data.

Your job is to help sellers understand the advantage of setting a reasonable asking price. Start by asking these questions to discover the seller’s motivation:

  • Why are you selling?
  • How soon do you need to sell?
  • Are you willing to price your home at market value?
  • What is your priority? Getting your price? Or whether or not the house sells?
  • What is your game plan if, for some reason, the house doesn’t sell?

Sellers should give you permission to tell them the truth. Ask them, “I can tell you what you want to hear, or I can tell you the truth about the market and the pricing; what do you want me to do?” Be hard on the market and soft on the people. Establish common objectives for the selling process.

2. Know your numbers. 

Be prepared to interpret the current market so sellers can make intelligent pricing decisions. Handle pricing objections by answering with facts, data and logic that support your point. Be sure to highlight these details:

  • Active listings versus pending sales.
  • Number of new listings each month versus last month and last year.
  • Active listings versus sold listings.
  • Month’s supply of inventory; Absorption Rate.
  • Average days on the market in MLS, in that area of town, in that subdivision.
  • Average Sold Price.

This information can be extracted from your MLS statistics, or you can outsource like I do. Consider using a product like Real Market Reports; I get a report each Monday for the areas I work, and then I use it on my listing presentations to keep my sellers updated on the market.

3. Help the seller understand the benefits of setting the right price. 

Of course sellers always want more money for their home, and the best way to get more money is to price the property right in the beginning. Some of the benefits of proper pricing are:

  1. New listings create a buzz in the real estate community. The right price attracts more agents to show the house.
  2. The right price generates more calls and Internet inquiries.
  3. Homes sell closer to their asking price during the first few weeks that they are on the market, causing them to sell for a higher price in a shorter time.
  4. Fewer mortgage payments mean less interest paid, which means more money in the seller’s pocket!
  5. The right price creates a sense of buyer urgency. Buyers will think your home is a great deal compared to the others on the market!
  6. The right price places less hassle for the seller to keep up the home for showing(s).
  7. It is better to sell the house now as the real estate market is fluctuating, and prices may go down even more.
  8. The longer the house sits on the market, it’s likely for buyers to think that something is wrong with the house.
  9. Keep your ultimate goal in selling the house in mind. Normally, the goal is to move on with your life and into your new area or new home.
  10. You never get a second chance to make a good first impression. 

4. Become an expert in scripts and dialogues. Learn the answers to the most common objections. 

All sellers say the same thing: “We are in no hurry! We aren’t going to give it away.”
Sellers always feel that their improvements will add value to their home. Improvements add to the property in two ways: they make it more salable, and they make it more showable - but improvements don’t make it more valuable.

The question for your sellers is simple: do you want your home to sell, or do you want your home to sit on the market? Use this football analogy to explain the importance of being in the market to sell - not just on the market. Ask:

  • How many players are on a pro-football team? … 53
  • How many players from each team are on the field? … 11 
  • How many players from each team are sitting on the bench waiting their turn in the game? … 42
  • Do you want to be one of the 11 players in the game to score or one of the 42 sitting on the sidelines with no opportunity to score? 

Becoming one of the 42 players sitting on the sidelines is what can happen when you overprice your home for the seller. You and the seller both lose the opportunity to score.

5. No matter how good the marketing, an overpriced home can’t sell.

Most agents spend more time with sellers presenting their marketing plan than they do determining proper pricing. Instead of working to get the seller to set the best market price for their home, many agents believe that they will be successful in selling the house because of the condition along with their market savvy and skill. Hope is not a sales strategy, nor does it sell homes!

Many sellers with an overpriced home usually are surprised that their home does not sell with the first listing agent. These sellers are quick to place blame on the listing agent and the agent’s lack of good marketing for the lack of a sale. They never imagined that it didn’t sell because it was overpriced. Sellers feel that marketing is the answer to a sale. If only we would advertise their home in the New York Times, sellers think, a good buyer will see the ad and pay full price for the home. Most sellers are somewhere inside “Never Neverland,” and we’re responsible for bringing them back to reality.

An unsold, overpriced listing negatively impacts your profitability. It costs time and money while it delivers no revenue to your business. The situation only gets worse the longer the listing languishes on the market.

Remember this line: “Mr. or Mrs. Seller, my job isn’t to control the market; it’s to interpret it so that you can make an intelligent decision.”

Some sellers are determined to sell their home at a particular price; they have a price in mind and don’t want to stray from that price - no matter the message that buyers tell them by giving them no offers! Telling potential clients the truth is important. It isn’t easy to tell a seller that their $200,000 home is overpriced by $40,000, and it’s not easy to tell them that their home needs new paint, carpet and other repairs if they hope to sell in this millennium!

The Code of Ethics- Article 1 -3 says, “REALTORS® in attempting to secure a listing shall not deliberately mislead the owner as to the market value.” Print a copy of this, and put it in your listing presentation to explain why you don’t over- or underprice listings.

If you take an overpriced listing, you give the seller false hope, and taking this listing may give you a bad reputation in your community for not being able to sell the house.

6. Sellers fear that agents will underprice their home.

Experience shows that buyers will not let a seller price their home too low. They recognize a well-priced property and almost always bid the price back up. Show your sellers why setting the price just below market value will increase buyer interest, generate more showings and result in multiple offers - they only get one chance to make it right. Don’t get so involved in the process of winning the listing that you forget to ask yourself if it is smart business to take the listing, and on what terms?

7. Ask yourself serious questions before taking a listing.

  1. Are the sellers motivated to sell? What is their sense of urgency?
  2. Is this home in salable condition?
  3. If not, what can be done to improve the salability?
  4. Are the sellers willing to make the improvements or price accordingly?
  5. What are the positives of the home? What are the negatives?
  6. Are there any structural items that need to be addressed?
  7. Will identified negatives be addressed by the seller prior to listing the home?
  8. Will the seller agree to price the house within the neighborhood comps?
  9. Will the seller list with you, at your commission rate and terms?

If answers to most of these questions are “No,” don’t take the listing.

Keep these three “don’ts” in mind:

  • Don’t work with sellers who won’t price it right. 
  • Don’t work with sellers who won’t make the necessary repairs or cosmetics to get their home sold unless they compensate the deficiencies with price.
  • Don’t let your seller get penalized for starting out at a price that is too high for the current market.

An unreasonable seller’s comments about your inability to sell the home can cost you future business and ruin your local reputation - not to mention all the time invested and marketing dollars you spent. If you take a listing overpriced, the seller obviously is a better salesman than you! It’s more important to have listings that are salable. A “sold” sign and a satisfied customer are our best sources of advertising! A well-priced listing is money in the bank!

In the end, we are judged by our results. Either the home sold or it didn’t. Both the seller and the public judge us by our performance. 

How do you want to be known in your marketplace?

Alexis Bolin has been in residential real estate for 33 years. Currently a broker-associate with ERA Legacy Realty in Pensacola, Fla., Alexis has closed over 100 units per year, was ERA’s Number One Agent Nationwide three different times, and is a popular speaker for real estate events like CRS Sell-a-bration.

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