When a home seller comes to you, they expect a level of help that only you as a real estate agent or broker can provide. However, when it comes to determining the listing price at which to sell their home, things can get ugly. It may even deter most from working with you. Most home sellers only consider WIIFM (what’s in it for me), basing the listing price on what they paid, owe and/or want to sell it for. Dollar signs shine in their eyes, and the cash register sounds. They overprice. Or some people just want to get rid of their homes quickly or fear no one will buy their home. They underprice. But we all know as real estate professionals that comparative, recent sales are the best indicator. Here’s how to help home sellers see your point of view on pricing.
The Arrogant/Greedy Home Seller
We’ve all dealt with them, but for those who haven’t, some advice: use data to make your case. These home sellers overvalue their homes thinking that just because the market is hot in their area, their upgrades rock or their house is just, well, special that people will line up at the door. Obviously, they don’t care about comparative home sales. So manipulate the data. I don’t mean make up numbers, but take those home sales, for example, and show them the days on the market. Show homes for sale that were overpriced along with their days on the market (or repeat listings!). Establish some extra trust by pointing out your desire to help them succeed – quickly. Develop a relationship with them and find out what their goals and motivations are. Sometimes digging deeper into the numbers and background will paint a clearer picture for the seller that they would never have otherwise considered.
Be the Coach from the Start
Fear is paralyzing isn’t it? Some home sellers get the deer-in-the-headlights look when they hear your suggested asking price. These are often people who can’t believe their house is worth what it is and think you are trying to give their home away. Be the coach from the get-go and give them valuable data and advice to alleviate their nervousness with good data. Pump up the positive attributes of their home, but give sound reasons why your original listing price makes sense. Show the CMA for the area, specifically selecting recently sold homes that were on the market for a short period of time. It may take patience, but it will be worth it.
Remind Them About The Appraisal
Most home sellers, think they have to find just that one willing buyer. They often forget that the perspective buyer will probably need a mortgage, and the mortgage company will base their decision off of an appraisal. This appraisal will be based off of the exact same data that you should be providing them. Ask them what will happen if the appraisal comes in at your price. Would they still sell? If they say yes, then they should list it at (or at least close to) your asking suggested price. Remind them what it looks like if a home goes under contract and then falls out of contract – the public automatically thinks “something is wrong” with the house and will be more likely to avoid it. Why not just get it right the first time?
Price Sounds Good…House is Not
The buyer may expect their house to sell at a price comparable to others in the neighborhood, but the house may be in such disarray or poor condition that even good bones won’t justify the price. Do your due diligence before the meeting or call, take a look at the house and determine needed improvements you can see from the outside. Add to that list potential, simple, affordable improvements from internal issues and price them out. Then create a list and an action plan to present to the seller from which you can offer options to fit their budget (i.e. what improvements from the list are priority and that match what they can or are willing to pay). It will look really good if you come prepared and give them options. Let them know that you can still sell an unattractive home, but not for the average market value.
Remember that you are the real estate professional and stick to your guns when determining a price with a prospective client. Be prepared for objections and always give evidence they can’t refute. It will not only help them sell their home more effectively but also build more credibility for you! If they won’t budget, don’t be afraid to walk away. They will get another agent, but let them spend the marketing dollars on a home that won’t sell and then follow up with the home seller after it expires the first time and see if they have come to their senses.