As agents, in the course of preparing to meet with a homeowner, we can sometimes spend hours running comps to put together an accurate comparative market analysis (CMA) on the property. So, we get pretty good at determining a list price on a home for sale that’ll generate offers quickly, yet not so low as to leave some of our clients’ money on the table.
Even with the hours that we spend comping a property with the client’s best interests at heart, it’s inevitable that we will have to defend those suggestions time and time again.
The truth is, most homeowners have an unrealistic dollar amount that they think their home is worth, and it’s our job to educate them properly. Sure, we want a listing, but in pursuit of it, we shouldn’t take an overpriced suggestion that will ultimately leave a uninformed seller wondering why the house is still on the market months later.
Here are a few ways to work with sellers when giving listing price recommendations:
Build trust and loyalty with your potential clients before discussing price.
Trust has always been a vital factor in any real estate business transaction, but it’s the timing that we’re going to look at here. The listing appointment or first face-to-face meeting with a seller is typically preceded by an initial phone conversation with the homeowner.
I’ve found that it’s in that first conversation that I have the greatest (and possibly the only) opportunity to build long-lasting trustworthiness and credibility with the homeowner.
Why? Because I don’t think there’s ever another time when homeowners are as attuned to what you say asthey are in that initial fact-finding phone call. It’s within the first conversation that the interviewing process begins, so it’s crucial that we accurately convey our credibility from the get go.
So, how do we convey credibility to build trust during the early stages?
- Start by building rapport, just as you would in the initial stages of a friendship.
- Share some of your accomplishments as they relate to the specific town, geographic area or subdivision.
- Find commonalities in the seller’s personal story and situation and relate them to your past experiences and successes.
- Be very specific about your knowledge of the hyperlocal area and even relate past clients’ (if nearby) stories and successes.
If you try to incorporate some of these ideas into your initial phone conversation with your potential client — rather than going for the jugular and vying for the listing right away — then the credibility and trust that you’ll have built will aid you in your discussion of price.
Handle the price objection before it becomes an objection.
How do you handle a price objection before one even exists? You’ll need to do some preliminary fact finding and then anticipate a homeowner’s reaction to your list price recommendation before you give it.
During the several talks that lead up to the conversation on price, simply ask sellers what they think the home is worth and why. Don’t be afraid to ask how they arrived at that number.
In any case, before you discuss price, you need to know what sellers believe their house is worth, so that if you should have to burst their bubble in a future conversation, you can anticipate what their exact response will be.
If you can accurately predict the response to your listing price recommendation, then you can craft a well-prepared rebuttal instead of looking shocked that anyone would disagree with your well-researched analysis. That leads us to our next point: the facts.
Show sellers exactly how you arrived at your recommended list price.
I don’t need to tell you to print full-color comps in the best quality (high DPI) possible because I’m sure you’ve already done that. It’s much harder to convey the condition of comparable homes to a seller when there are 10 different shades of gray on the paper. So use the best paper and color printer that you can find — it’s worth the few extra dollars.
Remember, you already know what the seller believes the value of the home to be and why, and you know how he or she arrived at that number. Now it’s time to show the seller why that number might might be inaccurate.
Pride is an issue here, because who likes to be wrong about what they say? It’s much easier to accept that you’re wrong once new information is brought to light. When we show sellers new information, it allows them to make a new decision freely without sacrificing their pride. Consider a simple phrase along the lines of, “I can understand why you would have thought that you’re home is worth X amount of money. But based on what we’ve gone over, do you see how listing it at X amount of money makes sense?” The truth is, with many homeowners, proof of sold inventory isn’t enough, which is why you also need to print some comparable overpriced expired and withdrawn listings.
Give sellers expired and withdrawn listings that are similar to their property.
At this point in the conversation, if the homeowner still doesn’t agree with your recommended list price and refuses to budge, you can gently reveal what happened to other listings that were overpriced and in the same general condition and location as the house being sold.
I like to print out a detailed history for each expired listing that shows how many price reductions need to be made, until the seller finally withdraws the listing.
A last resort: Take the seller to see the competition.
To be clear, I’ve never really had to employ this last resort strategy, but I can see how it could be powerful in proving your point. As professional homebuyers ourselves, we often look at current available inventory before we list one of our fully renovated homes because we need to know what we’re up against.
Sure, it’s more work and time on your part to show sellers some of the would-be competition at their proposed list price, but it’s sure to drive your point home, pun intended.
Try these tips next time you are dealing with unrealistic pricing expectations, and see if you can’t get that seller to budge a little quicker and easier.