There are few things more stressful in real estate than having an overpriced listing. In fact, in my experience this is the number one reason that some real estate agents don’t like listings….because if you don’t price a listing right, you know what’s going to happen, right? Mad sellers who yell at you! Ouch!
The good news is that you can solve this problem relatively easily by following these five steps (and I also include that actual script you can use later in this post...so keep reading):
1. Start with the right price
One of the most critical skills you can learn is how to educate sellers on pricing and lead them to hire you to sell their property at a price that will allow it to sell and get them top dollar for the property. Be “Smoky the Bear” by knowing that prevention is by far the best approach.
Did you realize that in most real estate markets in North America, over 70% of listings are put on the market by agents at a price they will NOT sell? That was shocking to me. Over two thirds of new listings on the market will either expire, cancel, be withdrawn, or require one or more price reductions before they will sell! That’s hard on you, the agent…and it also does not serve the seller.
Decide that getting the right price from the beginning is important enough that you will invest the time and effort to learn your market and develop the skill to actually convince sellers on the right price from the beginning. That also means knowing how to help sellers beware of agents who are just out for a listing and will tell them what they WANT to hear, rather than the truth.
Make sure you watch the video for more on this.
2. Let them know you’re “on top of it.”
The moment you realize the property may be overpriced, communicate quickly with your sellers.
The worst thing for your sellers to hear from you is silence. They get unhappy very quickly when they don’t hear from you AND when they’re not having showings.
Call them within the first few days of not getting much activity and let them know you’re not satisfied with the lack of showings/interest. It’s important to reassure them that the marketing is in full gear and that their property IS being fully exposed to the buyers out there.
3. Keep it about “the market.”
Remember, you don’t get to determine the value of their house…and neither do they. How much they paid for it before, or how much they owe, or how much they want/need has nothing to do with the value of their property. It’s all about the market…so always speak in terms of “what the market is telling us….”
4. Give them “fair warning.”
In other words give them a heads up that a conversation about a price reduction is coming. In NLP (NeuroLinguistic Programming) this is called future pacing. Before calling them on the phone and just “popping” the bad news, “We need to reduce the price!”…let them know that if things don’t pick up in the next few days, you and they are going to be looking at the pricing situation.
So here is all of this in a BONUS script to help you with this conversation:
“I just wanted to let you know that…I’m not totally happy with how the number of showings we’ve had so far and how market has responded to our pricing. …Because I've got your property fully exposed to the market...and we're getting it in front of the buyers, but we haven't had the number of showings or the activity we like to see the first week on the market... Are you with me?
And you know…my commitment is to help you…get your property sold for top dollar, correct?
So…we'll watch what happens this week...and I'll continue to monitor it and follow up with all interested buyers...and if we don't get a real up-tick in buyer interest, we're going to want to re-visit our pricing and see if a price adjustment is necessary… Fair enough?"
5. Reduce the price sooner, not later.
The best time to get top dollar for a property is in the first 30 days on the market. Psychologically this is very important for Buyers, so don’t procrastinate on adjusting the price or having this conversation with sellers.
Think about it this way, do we like to buy something old and stale…or new and fresh? Whether it’s a loaf of bread or box of cereal or a new pair of shoes, or a car, people prefer something that’s new to market. They don’t want something that’s been sitting on the shelf for months. It’s the same with a house for sale. The longer is sits on the market the less excited buyers are about it. They lose any sense of urgency, AND when they do make offers, they tend to be lower offers.
It is in yours AND your sellers’ best interest to get to the right price quickly.
Final warning…when does this NOT work? Either when the sellers are not motivated or if you’re not communicating well with them. The motivation issue is likely something you can’t change. However, the communication issue you can do something about…by developing your communication and influence skills. That’s one of the primary things my coaching members learn from working with me.
If you have questions or comments about getting price reductions and/or communicating with sellers, post them below. Also, if this helps you, please share it with other agents you know so we can get the word out to more agents.