The market does appear to be cooling off and that can prompt painful conversations with clients who may not realize they need to temper their expectations.
Show clients data.
And tell them the story that will unfold as their home hits the market.
These are just some of the strategies that are going to become more important as the housing market cools off, according to Jenny Wemert, CEO of Century 21 Advantage Gold, and J. Philip Faranda, team lead at Wemert Group Realty.
Speaking at Inman Connect New York 2019 Wednesday afternoon, both Wemert and Faranda acknowledged that the market does appear to be turning, and that can prompt painful conversations with clients who may not realize they need to temper their expectations.
“These are difficult conversations to have. It is very ticklish,” Faranda said. “But the consequences of mistakes are spectacularly expensive.”
Faranda said that in order to get clients on board with his price recommendations, he starts giving them market information before actually meeting in person. That, he explained, “gives them the very clear message that we are thinking about this before you go in.” When he does finally meet with a potential client, Faranda pulls up data in front of them so they can see what a realistic price might be.
“We do it in real time and that way when the data gets spit out they know there’s nothing we’re hiding up our sleeve,” Faranda added. “It’s data driven. The math will determine the path.”
His point was that data and transparency are key parts of giving sellers realistic expectations.
He also suggested that homes essentially can’t be underpriced. Even a property listed for $1, Faranda argued, would generate enough interest that potential buyers would bid up to its true market value. In other words, overpricing is the problem and underpricing the solution.
Wemert explained that she also stresses to sellers that a listing price doesn’t reflect the true market price of a home. Instead, it’s a tool for trying to appeal to the largest possible buyer pool. That can mean pricing a home lower than sellers might want and helping them understand the likely outcome of that price, which could be multiple offers.
“You have to look at pricing from a marketing position,” she said.
Wemert also agreed with Faranda that preparing sellers for a softer market involves a lot of advance research, including how long sales are taking and other metrics. She recommended showing this information to clients and, if they really don’t want to budge, coming up with a schedule — she uses 21 days — for price reductions if the property doesn’t sell in a given amount of time.
“You don’t want your sellers to be caught off guard because you didn’t do the work upfront,” she said.
None of this necessarily makes these types of interactions easy, and Faranda noted that “pain is part of the conversation you have to have.”
Wemert added that agents also have to bring up sensitive topics and “be brave enough to tell them that their house smells and that they have to paint.” But, she said, if agents go in with the right data and have a plan, getting sellers on board with realistic prices is possible.
“You have to make them feel good about the decisions they’re making,” Wemert said.