You recognize the importance of pricing a home to sell, but sometimes lofty goals and emotions can cloud the pricing conversation. Steve Schlueter, a Keller Williams agent for 19 years, offers techniques to help you move past humps and allow your sellers to see the right price for their home.
The Importance of the Right Price
“There’s a lot at stake for both you, the real estate agent, and seller when the home sits on the market,” says Schlueter. It is imperative you get the price of the home right the first time.
- Your reputation. The client assumes that you are not doing EVERYTHING possible to sell their home.
- Their profit. The longer a home sits on the market, the further the price drops. Research shows that a house that has to chase the market with repeated price drops will sell for less.
Schlueter is adamant that, “If a home sits on the market for more than 14 days, the reason is price.” If it’s been two weeks, it’s time to ask the seller if they’re ready to re-evaluate the price of their home. Before you do, you must be confident about the price the home should sell at.
Home Pricing 101
In SHIFT: How Real Estate Agents Tackle Tough Times, Gary Keller, co-founder of Keller Williams, teaches on the principles of a good pricing strategy. Effective pricing begins with identifying the right comparable properties.
"The right comps make the analysis more accurate and a seller's acceptance more likely. So what makes a property comparable? There are four main factors: location, size, amenities, and condition. Whether you use recent pendings and solds or active listings and expireds, you are attempting to assess the price range in which a home will sell," he writes.
Schleuter adds, "There are three prices for every home: premium, market, and wholesale. To set the price of a home, walk your client through each,” he says. “Make sure to compare active listings in competing neighborhoods – do not limit comparisons to their neighborhood.”
Kelle – your AI-powered virtual assistant – has made this easier than ever! Through the Market Snaps feature, you have access to neighborhood-specific market reports in the United States and Canada.
Additionally, sellers must understand the reality of the market they are in and how it's moving.
"The direction in which a market is going and the speed at which it's moving determine pricing strategies," reminds Keller.
*Here are some basic factors to watch to determine if you're in a buyers', sellers' or balanced market.
- Inventory: How much is for sale, and is it rising or falling.
- Days on Market (DOM): How long it is taking properties to sell
- Price per Square Foot: A good comparative indicator of prices - when a group of properties has common qualities and features
- Changes in the Local Landscape: Monitor changes in major employers, shopping, schools, other services in the community, and changes in local laws that impact housing.
"Remember, market cycles are like a seesaw. It's the balance between the number of buyers on one side and the number of sellers on the other. More sellers drive prices down; more buyers drive prices up," says Keller.
When the Price Is too High
If you’ve discovered the home has been priced too high for the market it's in, “the tactic is to fix it elegantly with price adjustments to get it sold in a certain time frame,” says Schlueter.
Here are some techniques to get your sellers onboard:
- Hit on emotion: Dianna Kokoszka, CEO of KW MAPS Coaching, says, “Come from contribution and focus on emotion. Ask your sellers to think of the reasons why they want to sell their home and remind them of their motivation. Remember, logic makes you think, emotion makes you act.”
- Educate: Make sure your sellers understand the market they are in and clearly outline why their home will not sell at its current price. Your local market can change quickly, so it’s imperative you stay plugged into your local numbers. With this education in hand, you can effectively move your clients in the right direction. Schlueter reminds us, “Ultimately, the market tells us if we are on track and are able to meet this objective.”
- Practice and deliver the scripts: Scripts are important for several reasons. They give you confidence and help you navigate the pricing conversation with ease.
- Kick off the pricing conversation with this script from KW MAPS Coaching:
Seller: We just don't think that the market is nearly as bad as everyone thinks, and our house is a lot nicer than the others in the neighborhood.
Agent: [Insert Seller's Name], I can appreciate where you are coming from, and let's take a quick look at the market statistics for your area. Today there are [Insert Data] times the number of houses on the market than there were just a year ago, and as you can see sales are down approximately [Insert Data] percent. From a marketing standpoint, this theory is called supply and demand. Therefore, when the supply goes up and the demand goes down, what has to happen to pricing? Does it go up or down?
Agent: Let's do the right thing and do it based on the shifting market and price the home where it will sell, not a price that will cause it to expire.
With the right pricing techniques, you will get the home sold, secure a profit, and establish a client connection that lasts long after the sale.
For a deep dive into home pricing and other selling techniques:
*Source: Win With Sellers