Selling a home can be a very stressful time for a Seller. One thing a Listing Associate must do to be successful is to instill trust in their clients. Your clients must trust you as their Real Estate Professional to provide leadership and guidance/ insight into the market and the conditions which effect their property.
However the emotional connect to their property may make them hesitant to make the right decision and be competitive when it comes to pricing. Navigating a price reduction can be sticky ...but if done correctly, you will enhance your relationship with your client and help them reach their goal of selling their property.
As a professional we all know price sells in this market. With tons of competition and many Sellers being forced to sell below the price they paid for the home ...it is more important than ever to educate your sellers from the beginning to market conditions. But when you find your listing sitting on the market with no offers for more than 60-90 days you have passed your best opportunity to reduce.
If your new listing has not received positive response from buyers in the first 30 days ...then the culprit is most likely price.
If this is the case …You need to immediately adjust to make it competitive with other comparable properties. Even then your Sellers may be reluctant to price below their expectations and stay in front of the market.
Remember the old axiom.." Every day a home stays on the market past 30 days the value of both the property and the REALTOR begins to diminish" This is still true today!
The 5 Stages of a Price Reduction
It’s important to remember to stay compassionate to your client’s situation and to understand the stages a Seller goes through when their home is not selling as quickly as they anticipated.
1) Denial: Most home-owners will over-estimate the market value of their property by 10%.
2) Anger: After weeks of inactivity or no offers Sellers will often get upset and start looking for someone to blame.
3) Frustration: Sellers pent up anger becomes directed at the Listing Agent and they may begin to question your effectiveness and skills as a professional. This is normal …so try to not take it personal (even though it is). Tell them you understand and re-walk them through the process and show them market stats for the area to show which homes and which prices are selling…This may be a perfect time to take them on a “tour” of active comparable listings to show them their competition and how they stack up.
4) Disappointment: They realize their home will not sell for what they feel it is worth and recognize they may have missed out on marketing time by being over-priced.
5) Acceptance: They begin to trust your advice and counsel… In our market over 52% of all homes which sell reduce their price at least once. This is down from 71% in 2010… Nationally the current number is 56%.
The average price reduction locally is 7% …nationally it’s 11%.
(source: TARR REPORT & NAR)
Good Things Happen!
When the final list price was equal to the original list price, during the first quarter of 2011, the local DOM average was 60 days and the home sold for 98% of list.
When the final list price was lower than original list …(meaning there was a price reduction) … the Seller was penalized. The average DOM soared to 181 days and the sales price was 88% of original list price. A HUGE DIFFERENCE!
(source: TARR REPORT)
Final Thoughts:
Help your clients through the process …save them time, money and stress by educating them to price at market from the start. But even then, if the market shifts you must communicate and be visible.
Don’t hide because you have bad news to share.
Call at least once a week with a market update.
Listen to what they have to say and affirm their feelings.
Put them in the shoes of the Buyer…walk them through the decision process a Buyer goes through when looking at home.
And mostly…reassure them that you care!
Eddie Brown ©2011
www.ICU-Coaching.com
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