Virtually every training script I’ve ever seen has a line that says, “OK, so as your professional real estate agent, I’m going to advise you that we should price this home at (fill in the blank).”
And it’s not just the scripts. Pretty much every online CMA (comparative market analysis) program has a page where agents are encouraged to put in a recommended price for the home, often before the agent has even seen it.
We need to stop doing that. For one thing, that approach relies on sellers trusting you on price.
Now, you’re not doing anything wrong. People are just suspicious of real estate agents when it comes to price. It’s not a rational thing, but it’s hardwired into every seller.
When I sold my own home and hired two of my best agents to help me, I had the same reaction every seller does when they recommended that I reduce my price: “Damn agents trying to get a quick sale!”
I know better, and it still happened to me.
But the bigger problem is that telling the seller where to price the home takes “ownership” of the price. And if the price is at all disappointing to the seller, it puts you in a position where you’re somehow responsible for the seller not getting as much as he or she was hoping to make.
Repeat after me: You don’t set the price. The seller doesn’t set the price.
The market sets the price.
And you’re not responsible for the market.
It’s like the weather. You’re not God; you don’t set the weather. You’re just the meteorologist, showing people why it’s likely to rain this weekend. Then, it’s their decision whether they want to have a picnic.
That’s what professionals do. Why do real estate agents think that it’s a professional obligation to tell the seller where to price his or her home? Other professionals don’t do that.
I’ve worked with dozens of attorneys in my life, and not one of them told me what to do. They laid out the options and guided me to a decision. But it was ultimately my decision, and they didn’t make it for me.
Same thing with the other professionals I’ve worked with: doctors, architects and financial planners. They discuss pros and cons of options, and guide me through a decision that I make — they don’t simply tell me what to do.
So why do we teach agents to recommend a price?
Your job is to guide sellers through an analysis of what’s actually going on in the market and help them listen to what the market is telling them.
In a great pricing presentation, the agent and the seller work collaboratively, going through the comps and figuring out a range together. Get sellers engaged in the research, which will not only educate them but also get them invested in the outcome, rather than just hearing you proclaim it from on high.
And if the seller decides to ignore your advice and to set the price way up in the stratosphere, well, then, he or she might end up picnicking in the rain.
Don’t tell the seller the price; show the seller the price.
In other words, show, don’t tell.
Read “Pricing mistake No. 1: Asking sellers what the home should go for,” “Pricing mistake No. 3: Emphasizing unsold properties,” “Pricing mistake No. 4: Being ashamed of taking an overpriced listing” and “Pricing mistake No. 5: The big price-drop fumble.”
Joseph Rand is one of the managing partners of Better Homes and Gardens Real Estate – Rand Realty in New York and New Jersey and blogs about his local markets at the Rand Country Blog and about the industry at ClientOrientedRealEstate.com.