Sales are down, prices are flat and real estate professionals across the U.S. are seeing signs of a housing market slowdown. But there’s one group that might not yet have gotten the memo: sellers.
Though sellers with an exaggerated sense of a home’s worth are not uncommon, the shifting market is forcing many Realtors to rein in the expectations of clients who saw their neighbors’ houses sell just months ago and who are expecting similarly stratospheric profits.
It’s a delicate conversation to have after years of consistent growth. But according to experts who spoke with Inman, it’s also becoming more common, and it needs to be handled with empathy, transparency, and perhaps most significantly, data.
“The client needs statistics to see clearly what their next step may be,” Mike Stott, owner of real estate consulting company Your Coaching Matters, told Inman.
Stott recommended breaking down a home’s marketing results with clients. Show them how many views it had on Zillow and realtor.com, he said, then present them with a specific strategy for increasing the home’s appeal.
Stott outlined a hypothetical scenario in which he might advise a seller to improve curb appeal, paint the home’s interior, offer financial incentives or finally lower the price. And data provides the foundation for such recommendations.
“Our conversation starts with statistics,” he said. “An agent can’t go to the client and say ‘I don’t know what’s happening’ or ‘the market is slowing down.'”
Stott also recommended asking sellers to solve the problem of waning interest, should that become an issue.
“Can you think of anything else we could do to increase the value of your home in the eyes of the buyers and agents?” Stott suggested asking.
Stott’s point about data was a recurring theme among the real estate practitioners who spoke with Inman. Among them, Grazia Bennett, a Bay Area Realtor with Sotheby’s International, said that “honest and transparent communication is the key.”
“I send to my sellers a detailed report of all my marketing efforts once a week,” she explained. “I keep them informed during the week about the overall market and comparable properties. I always follow up with Realtors whose clients have shown interest in the property and share with my sellers their feedback.”
And Matt Richling, who practices in Ottawa with the RE/MAX Hallmark Realty Group, said that the key is “kind of walking them through the numbers.”
“It’s based on data,” he told Inman. “If I don’t have my information they’ll question it.”
Richling confirmed that conversations about a softer market and tempered expectations are becoming common in his area. Sellers get their information from the news or from what their friends and neighbors experienced and often “feel like they naturally have a pulse of what’s going on,” Richling explained. But in reality, they might be working with information that is long out of date.
“Having that firsthand knowledge is going to make that conversation easier regardless of what you’re looking to do,” he continued.
That conversation also will probably be easier if the sale price is one of the final things agents discuss with their sellers, according to Mike Pallin, president of coaching firm The Floyd Wickman Team.
Pallin told Inman that prior to setting a price, Realtors need to find out how much equity sellers have in a home, how long they are able to wait for a sale and what they’re flexible on.
“How long they are willing to wait for their money is really the key question,” Pallin said. “Price is the last thing you should talk about when you’re in a listing appointment.”
For homes that are languishing with sellers who won’t come down on price, Pallin suggested pitching alternative incentives to them. A 1 percent bump in commissions might get more prospective buyers through the door, he suggested, but wouldn’t be as painful to the seller as a 10 percent price drop.
“You really don’t ever have to deliver bad news,” he added. “It’s an education process without making them feel wrong.”
And like others who spoke with Inman, Pallin agreed that in the near future more and more agents will need to have conversations with their sellers about a softer market.
“Inventory has gone up, prices have gone down, interest rates are up,” he said. “I think we’re taking a deep breath right now as a market.”
Conveying that reality to buyers also will likely require more than just hard data and raw information, and experts who spoke with Inman stressed the importance of empathetic communication. It’s a strategy that’s hard to quantify — you can’t print out a report on empathy the way you can on market stats — but equally important because sellers are emotionally invested in their properties.
Stott’s suggestion for empathizing with sellers was to be explicit, saying something like “I’m sorry for what the market is doing to all of us.”
“You might need to acknowledge that it is painful to have this discussion,” he added.
And Pallin recommended being “a good listener before you start telling them what you think they want to hear.” It’s a skill that has always mattered, but one that will become increasingly important as a flattening market raises the stakes for many sellers.
Data and empathy won’t always work, of course, and Jim Weix — an associate broker in Florida for the Keyes Company — pointed out that there will always be “sellers who think their home is worth more than it is.” And at the end of the day, he added, “some people listen to advice, and some don’t.”
In those cases, the most effective remedy may simply be time.
“If a home is overpriced, it’ll get very few showings,” Weix told Inman, “and the seller eventually starts to figure it out on their own.”