Don't price to yesterday's comps. Price to tomorrow's market

On a recent coaching call, an agent named Martha raised her hand with a problem a lot of agents are quietly wrestling with right now. She has a listing in Northeast Florida. Thirty-two days on the market, price cut twice, and it still is not moving.

A lovely four-bedroom home built in 2019 with motivated sellers. And nothing.

Her county went from about 800 homes for sale a year ago to roughly 1,200 today. Their current days on market are stretching toward 100. She is competing with builders handing buyers rate buy-downs, upgrades and incentives.

She did what most of us were trained to do. She dropped the price, then dropped it again and called in asking what else there is, short of slashing it a third time.

Here is what I told her, and it is the same thing I would tell you.

Price, terms and marketing

Three things sell a house, and they are the only three we actually control: price, terms and marketing. When a listing is not selling, you do not go hunting for a fourth thing. You look at those three.

Here is the part most agents miss: You do not need all three firing at the same time. You need two of the three. One lever alone cannot carry a listing, no matter how strong it is.

• A great price with great terms? Your marketing can be weak, and the house still sells.
• Great terms and a soft price, backed by good marketing? That works.
• A sharp price with weak terms and strong marketing? That works, too.

But when only one of the three is working, you are stuck.

Martha’s marketing is strong. She is running open houses and advertising to the neighbors. So marketing is not her problem. Her problem is good marketing sitting on top of a bad price and bad terms. 

The hard truth

You can spend hundreds of thousands of dollars marketing a house with a bad price and bad terms, and it still will not sell.

Marketing is never the fix for a pricing problem. Before you pour another dollar into the listing, you have to get at least one of the other two legs working.

Start with terms, because agents forget this lever exists. When I say terms, I mean concrete things the seller can offer:

• Homeowner financing
• Buying down the buyer’s interest rate
• Accepting less money down
• Being flexible on the closing date

Those move buyers. In Martha’s market, the builders are winning on terms, while resale sellers keep white-knuckling their price. If your seller will not budge on price, terms become the whole game.

But the bigger idea is about price, and it is the mistake I see in every falling market. Stop chasing the market down.

Let me tell you how I learned it, because it did not come from real estate. It came from coaching my son Michael’s soccer team. I volunteered. I’m not a sports guy, but I was not going to be a sideline parent. This was the little-kid version, no positions, just a ball and a swarm of children chasing it.

That is exactly what my players did. They chased the ball, and so did the other team, so nobody ever got ahead. Then I had an epiphany. I told my players, “Do not chase the kid with the ball. Run past him, get in front, then turn and take the ball away.”

We won every game that season. In real soccer, that would get you flagged. As a lesson, it is gold.

A slow drip of price cuts is chasing the ball. In a falling market, if the value is here today and you price it right here, tomorrow you are already overpriced. You cut, fall behind and cut again. You are always a step behind.

Do not price the house where the market is today. Price it where the market is going to be 30 days from now. Run past the ball.

Another way to look at it

When you buy or sell a stock option, the screen shows a high, low and an average for the day. To guarantee the sale, you pick the low. The low doesn’t mean the floor.

A well-priced listing usually settles between the middle and low and sometimes sparks a bidding war that pushes the number back up. Pricing low on purpose is not giving the house away. It is how you create competition instead of joining it.

One more thing. Martha’s home is a two-story with all the bedrooms upstairs. In Florida, single-story sells faster, and buyers moving south usually want the master on the main floor.

Some agents try to market their way around a structural fact, saying they will just target families from up North who are used to stairs. That is a magic trick, and it doesn’t work. 

When something true about the house works against you, you do not hide it in the marketing. You show it in the price. Period.

The quick version, so you can use it this afternoon:

1. Audit the three levers of price, terms and marketing. Be honest about which are actually working. You need two of the three.
2. Never fix a price problem with marketing. No spend rescues a mispriced, weak-terms listing.
3. Build the terms like seller financing, rate buy-downs, less money down and a flexible closing date. Any one can become your second lever.
4. Price where the market will be in 30 days, not where it sits today. Get ahead of the ball.
5. Pick the low of the range to guarantee the sale. Let buyers negotiate you up.
6. Let structural truths show in the price. Never try to market around them.

Our job in a market like this is not to sugarcoat, and it is not to panic. It is to give the seller the truth about their house, kindly and clearly, and then hand them a strategy that actually gets them sold. That is the service. That is the coaching.

Serve, don’t sell. Coach, don’t close.