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Do you have what it takes to price your listings right from the start or to ask for a price reduction when needed? Although most real estate agents are afraid to go for it, the process is much easier than you may realize.
Pricing your listings properly at the beginning of the listing period is the most important step in getting your properties under contract. Although some of the following strategies are not for the weak of heart, try them — they really do work.
1. Detach sellers from their property
When most agents conduct a listing appointment, the meeting takes place in the seller’s home. The sellers have the upper hand because you’re on their turf. Meeting them at your office or at a neutral location evens the playing field.
2. Conduct an executive review
To detach sellers from their property, you must be prepared to conduct a two-step listing appointment, preferably incorporating an “executive review.”
If you’re not familiar with the executive review process, it’s not only effective when you list a property but also when you need a price reduction as well.
Here’s how it works:
- Invite at least three to five agents and your manager/broker to preview the property. Each person gives you his or her opinion of the list price in writing and why they selected that price.
- Meet with the sellers, preferably away from their property to share the agent/broker feedback as well as your other CMA material. If you use the two-step process, be sure to schedule both the review and the actual listing appointment as closely together as possible.
Please note, you must be prepared to do your listing appointment on the spot if they want a one-step appointment.
If you’re using an executive review to obtain a price reduction, have the most effective salesperson or your manager share the results. As the listing agent, say nothing.
Once the executive review team leaves, ask the sellers whether they want to change their price. If it’s clear that they’re still unrealistic, it’s probably the right time to terminate the listing.
3. Set the sellers’ expectation when you sign the listing
Sellers often tell agents that they want to “test the market.” Testing the market is a bad idea. Most of the showings occur during the so-called “honeymoon” period, the first 14-21 days in which the property is listed. After those first few weeks, showings drop dramatically.
It’s important to tell sellers that if they insist on overpricing their listing during this critical time, they may be sitting on the market for months.
A proven strategy is to use the 10 days or 10 showings strategy. When you take the listing, tell the seller that if you have been on the market for 10 days or have had 10 showings with no offers, then they need to drop the price.
In a good market, 10 days is more than adequate to generate an offer if the property is priced right. If the seller balks at the 10 days, a different approach in today’s low-inventory markets is the “10 showings” or “100 page views of the listing.”
4. Tell sellers: ‘I’m not here to list inventory — I’m here to move it!’
For the past 30 years, Mike Ferry has used the following script to help agents persuade sellers to list their properties at the right price: “I don’t want a listing — I want a family that has sold their home and moved.” This gets sellers in the right mindset to sell.
5. Stay in contact constantly
Price reductions are easier when you’re in contact constantly.
If you have missed the mark on the list price, the first step obtaining that price reduction is to be in regular communication with your sellers about what new properties have come on the market, what has been placed under contract and what has closed.
By constantly keeping your sellers up-to-date on the current market conditions, it’s much easier to help the seller understand what is happening in the market and to make an informed decision.
If you fail to do this, you can market the listing for six months, and when you finally do receive an offer, the seller will want to know, “Is that all I get?”
6. Pre-schedule your price reductions
A great way to make obtaining price reductions easier is to preschedule them at the time you take the listing. This is especially true if you’re in a strong seller’s market where properties are selling rapidly.
For example, I know one top producer who doesn’t mince words when the sellers want to overprice their listing. To work with her, the sellers must agree to reduce their price by 3 percent after every 10 showings or every three weeks, whichever comes first.
7. Change your marketing with every price reduction
Once you obtain a price reduction, the next challenge is how to get the attention of those brokers and buyers who thought your listing was overpriced.
To do this, change the photos, especially the main photo that appears in the first position on any brochure and on the multiple listing service as well as on any major real estate portal.
The reasoning is that when agents and buyers see the same photo, they remember that they have already seen the property and that it was overpriced. Because they don’t click through to the view the listing again, they have no way of knowing that the price was reduced.
This strategy increases the odds that your listing with the new price will be viewed again.
8. Charge a refundable marketing fee
One of the best ways to sort out who is shopping your services against another agent is to charge a $250 marketing fee upfront that is reimbursed when the property closes. (Although this strategy usually works well in the lower price ranges, it’s not an effective for higher-priced listings.)
One agent I know explains why it’s smart to use this approach like this: “The marketing fee creates a partnership, and the sellers appear more serious because their $250 is on the line. As dumb as it seems, it changes their mindset tremendously.”
If you want to price your listings right, these strategies have withstood the test of time — in fact, why not try one of these strategies on your next listing appointment?
Bernice Ross, President and CEO of BrokerageUP (brokerageup.com) and RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at BrokerageUp.com and her new agent sales training at RealEstateCoach.com/newagent.