You’ve educated your sellers about the market conditions, agreed on a price, and still, no offers on their home. Any agent knows that means that it’s time for a price adjustment and one of those not-so-cozy conversations.
There are six essential phrases you can use during the pricing conversation to help a seller set the right price when listing their home for sale.
Ft. Lauderdale agent/coach Aaron Novello shared those nuggets of wisdom this week on The Walkthrough™. In a bonus segment, he also offered advice for the price reduction conversation – i.e., how to convince unrealistic sellers that it’s time to lower the price.
Set expectations about price reductions at the beginning
You may be surprised to learn that Novello says the price reduction conversation should happen at the very beginning in order to manage the seller’s expectations.
“That conversation actually starts at the listing appointment. And again, we haven’t had to do that before. But once we come to an agreement in terms of where we’re going to get started at price-wise, I’m going to say to you something like, ‘Based on this information that’s available to us at this moment, because as I mentioned to you, price is a snapshot in time, this seems to make a lot of sense. And if the marketplace sees value in the price that we’ve decided to put on the product and the property, they’re going to tell us that they see value.’”
He points out that the way to determine if the marketplace sees value in the home’s pricing is through the number of showings and offers and informs the seller that if those numbers are lacking, something is wrong. Novello promises to keep them updated every week, and if no offers come in, he will suggest necessary adjustments in order to get an offer.
Novello calls his sellers when the listing becomes active to confirm that marketing, photos, and the MLS are all in place, as discussed. Then each week, he reaches out to the seller to report the number of showings. If there are no offers, he reminds them of their initial conversation about the possibility of needing to make adjustments in price.
“By the third week, they know what’s coming. And then that conversation is, ‘Hey, this is week three, I just wanna give you a quick update, let you know what’s going on. It’s been three weeks since you’ve been on the market, 21 days. And the good news is that in that timeframe, we’ve had 10 showings, which is wonderful. Again, what that means is that what we’re doing is working, we’re driving traffic into the home. The networking we’re doing with top agents, and all the marketing that we’re doing on your behalf, it’s working. At the same time, having that number of showings in a marketplace that’s beginning to change and no offers, it’s actually beginning to concern me. May I share with you why?’”
Consistent communication makes the conversation easier
Novello says that because the dialogue has been consistent with the seller every week, it should come as no surprise when you now must have the conversation to lower the price. The next step is presenting your seller with two things:
- The facts: The marketplace is showing that they see enough value to look at the home, but not enough value to buy.
- Options: Give them choices where they feel they’re still in control.
He says that conversation could go something like this:
“So it sounds like you’ve decided that what’s in your best interest in order for you to get what you want, at the time you want, is to actually get the property sold. So with that being the case, we have [two] options that are at our disposal. I’d like to go over them with you so that way you can decide what you want to do, and whatever you decide, I’ll support you.”
“The first option is that we leave the price the same. And the reason we would do that is basically just hope and wish and pray that after 10 showings, somebody would show up and maybe make us an offer that’s close to what we’re asking. At the same time, and my intention in saying this is not to be negative, it’s just an accurate assessment of reality, having been on the market this length of time with that many showings in a marketplace where inventory is going up and demand is softening, the probability of that happening is pretty small. We’re probably going to get more of the same. And that’s not being negative, [it’s] just an accurate assessment of things,” Novello continues.
“The second option – [and] this is what most sellers decide to do provided that they still have the means and the motivation to get the job done and to get the property sold – is we could just simply make an adjustment in the price. And in doing so, that’s going to dramatically increase the probability that we’ll get even more activity and an offer on the table. Because I’d much rather bring you an offer that you can say ‘no’ to, or I can negotiate on your behalf and pull them up to where we want them to be, versus being in a situation where we’re not getting any [offers].”
Help your seller find the right price adjustment
The sellers will ultimately have to make the final decision on just how much they will reduce the price of their home. But it’s up to you as their agent to guide them along using your market expertise. Getting them to the right price by sharing the most recent market data on homes sitting on the market in their neighborhood is paramount, and Novello says that this is where that communication skill set comes into play again.
“We can either, A, make a small adjustment that your neighbors have already tested for us and didn’t work for them, and have to revisit this conversation and jeopardize your timeframe in which you’d like to make this move. Or we can make an adjustment that the marketplace is showing us is required, and have the next person who’s going to come into the neighborhood and buy a home, make sure that they look at yours and make an offer on yours versus the competition. So based on what’s important to you and what you value most, what do you think we should do?,” says Novello.
Let’s be frank. No one wants to leave money on the table when selling a home. There are already numerous out-of-pocket expenses to consider as a seller, and paying you, the listing agent, is one of them. But, beginning this conversation from the start will help to alleviate some of the pressure that comes with recommending a price reduction.
Educating your seller with market statistics and logical choices will enable them to make an informed decision on their own. This will empower your seller and, at the same time, keep the onus off of you and the final outcome resting squarely on the seller’s shoulders. Whether the property sells or not, they will feel that they have been just as much a part of this process as you.
Header Image Source: (Gian Paolo Aliatis / Unsplash)