Greed, greed greed: hate to say it, but this is the emotion that drives sellers to price their homes too high, making it hard for you to sell them quickly. This problem is very common in a slow- to-average market. On the flip side, greed also complicates life for agents in today’s hottest markets, such as California and Arizona. If you get 10 offers on a home the day after it goes on the market, the sellers are mad that you didn’t price the home higher.

Greed, greed greed: hate to say it, but this is the emotion that drives sellers to price their homes too high, making it hard for you to sell them quickly. This problem is very common in a slow- to-average market. On the flip side, greed also complicates life for agents in today’s hottest markets, such as California and Arizona. If you get 10 offers on a home the day after it goes on the market, the sellers are mad that you didn’t price the home higher.

The way to avoid pricing arguments is giving the sellers as much market information as possible early in the listing process before you name a price for their home. It’s not enough to toss a few comps on the table and say, “Well, I figure your home price should be somewhere in the middle here.” Before you get to the comps, make a strong presentation about pricing trends. Present facts about the economy, the number of people coming in or out of the market, the employment rate, changes in prices over the past year, and how long homes are on the market. Show your customer recent newspaper articles that back up the picture you are painting.

You may be tempted to skip this step if your market is hot, because the seller is going to get quick offers no matter how you price it. Don’t do it. Explain what’s happening with charts, graphs and hard data that show beyond a doubt that you are the expert and your pricing decision is trustworthy. Specifically, prepare the following from your local MLS data in regards to your selling area:

1. Ten-year history of average list price versus average sales price. This graph helps sellers understand long-term pricing trends. Point out the peaks and valleys of the selling prices, saying, “If you had bought here at the top and sold here at the bottom, you would have lost money.” Go through several examples, showing times when prices have fallen, stayed flat, or risen.

2. Listing inventory versus sold inventory. Graph this data for at least 12 months and up to several years. Point out any recent changes in the number of listings, and explain how that pushes prices up or down.

If you are in a market with excess listings, you can say, “You can see that last year 7,000 people put their homes on the market but only 4,000 homes sold. Why do you think 3,000 homes failed to sell?” Mention that some of the homes that sold were ugly, old, located on busy streets, and so on. Explain that the main reason these sold while others sat was price. Homes that don’t sell are simply priced too high for their location and condition.

If your listing inventory is very low and falling, explain to the seller that there are too many buyers seeking too few homes and the seller can expect multiple offers and a quick sale.

3. Absorption rate. This represents how many properties were absorbed (purchased) in a market within a certain time period. Divide the number of listings in your market by the number of sales for the month to get the absorption rate in months. For example, if your market had 300 listings last month and 100 sales, the absorption rate is three months. When the absorption rate increases, say to six or 10 months, it means it’s taking much longer to sell the existing inventory. Buyers can be pickier, and the best-looking, best-priced homes sell first.

It may sound like a lot of work to gather this data, but once you set up your presentation, you only have to adjust the numbers each month. If you bill yourself as a full-service professional, charging a full listing commission, it’s even more important to take time for this job, as it can help set you apart from discount service providers.

Blame the market for a disappointing price

In a down market, or in a case where sellers have very little equity in their home, your customers are going to feel frustration and disappointment if you suggest a price lower than they had hoped to get for their home. Acknowledge their feelings, but tell them up front that it’s no one’s fault; the problem is the market. Tell them, “With the economy and market that we’re given, your price needs to be here.”

Use showings to guide price adjustments

Explain in advance to your sellers that the market will provide more pricing signals once the home is listed. Tell your sellers, “If we don’t get any showings and we don’t get any activity, the market has spoken. The price is too high.” If the sellers ask for more advertising, tell them, “We do 80 percent of the marketing when we set the price. I could rent a plane and advertise your house on a banner all over town; I could spend every penny I have on marketing, but if your house is overpriced by $30,000, we’re wasting our time.”

Don’t get mad at your sellers for feeling ordinary human emotions such as greed or frustration. Whether prices are rising or falling in your market, answer emotions with facts. Your reputation as a leading home-sale expert will build quickly, and that’s important to your business growth and success.

Howard Brinton is a real estate sales motivational speaker and the founder and CEO of Star Power Systems, a sales training organization that offers tapes, books, videos, conferences and a club that distributes selling techniques from the nation’s top producers.

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