- Pricing real estate is an art and not a science unless you are an appraiser.
- Retailers set specific prices; real estate works within price ranges.
- Even the best plans require monitoring and adjustments.
We all know that “adjustment” means price reduction, don’t we? Dress it any way you like, it is going to be difficult for many of us to mention the subject.
As a professional, I assume the role of director and lay the ground work from the outset.
The best we can do is to market a home effectively, but the simple fact is that real estate is a product, and the consumer is better equipped than ever to evaluate, compare and decide whether to make an offer and what kind of offer to make.
The consumer might have a prepared real estate agent, and most will need the blessing of an appraiser. But what happens in between will determine whether we, as the listing agent, get our seller clients to the finish line.
Other than selecting their agent, pricing is the major variable at the sellers’ disposal. It directly impacts their proceeds, which might determine whether they can sell and what happens after settlement.
Asking prices are assumed to be flexible. Depending on the local market, it is either the ceiling (the high point) or the floor (the starting point) for negotiating.
Does it correlate with the location, features, condition and competition, including history? Are you getting showings? Offers? Feedback?
My point is that if sellers are not getting offers that interest them, one of two things is most likely happening.
Either buyers are finding what the sellers are offering at a lower price, or buyers are willing to pay your sellers’ price but expect more for their money.
How do you ‘sell’ a price reduction?
Reducing for the sake of reducing might suggest that you are grasping at straws, which undermines your credibility.
I tell my clients that a price reduction must accomplish one of two goals.
- One goal might be to convince those who are aware of your listing to see it, or if they have seen it, to make an offer.
- The other is to change or reposition your listing within a lower “search bracket” so that it can compete better.
A long time ago, I was taught that when sellers determine their asking price, they pick their competition.
Although the local market might affect an otherwise attractive asking price, the sellers need to decide whether they are more motivated by achieving a certain price or by being to able to move within a particular time frame.
It is our duty to ask the right questions, to formulate a game plan and to advise our client throughout the process.
Adjustments are not a sign of failure as long as we lay the groundwork and monitor the process.