Recently an Institute member approached Laurie with a question about how to deal with the owner of a $6+ million home who listed with her for just a few months and has been renewing for just a month or two at a time. The agent was eager to get a longer term listing, but unsure how to accomplish this.
We thought other members might find Laurie’s suggested strategy and scripts useful. Here’s Laurie’s response about the situation (with sample scripts)…
Your seller is used to being able to extend for a month or two at a time. Shifting his attitude about renewing will be tough. You’ve invested in marketing, have buyer prospects, and don’t want to lose the listing. At the same time, with short term renewals, it is hard to justify doing more marketing. The questions become -- can you create a “WIN” for him with a longer term renewal and how tough are you willing to be?
I don’t know his personality, but I’m guessing he is tough and needs to feel that he a winner in any negotiation with you. With what limited information I have, here is one possible approach …
First, analyze the price range this property falls into. Pull the statistics.
- How many homes are on the market in the $6 million to $7million price range?
- How many sales (REAL BUYERS) have there been in the last 12 months?
- What is the median days on market statistic for solds in this price range?
- The days on market range (from ___ to ____ days) ?
- How many months of inventory now exist?
- What percent of the list price did the sold properties sell for?
- Are there any sales pending?
I’m guessing that your listing term to date will be less than the median days on market – that means you haven’t had a fair chance to sell the home. If that’s true, make some charts to share the reality of the market with him. Even if you’ve done this already, do it again, unless it been fewer than 30 days.
Send him the market update. Then, sit down with him and say, “You and I have the same goal – to sell your home as quickly as possible for the highest price the market will pay. I have spent thousands of dollars toward that goal and my team has spent countless hours working for you. We are committed to continue until the job is done. We have a number of good buyer prospects with whom we are aggressively working and we will sell your home. Hopefully we are close to the right deal. It is listing renewal time, so let’s discuss three options.Option one: You can start all over with another agent, but you will lose ground by starting over. This is dangerous in a declining market and you won’t find anyone more motivated to sell your home than my team and I are. In fact, please know if you decide to do this, my commitment to you is that we will take your listing in the future if and when you decide to change real estate professionals again. “
It is important to START with this option so he knows you understand it is an option. You have the advantage by putting it on the table first. “Option two: You can renew for the short term. However, please understand that if you do that, you are shifting all the risk to me and this also is a negative for you. Here’s why --You are asking me to continue to invest more time and more money in a month-by-month marketing plan. In your business would you be willing to make a significant long term investment for a client who renews their contract with you month by month? Probably not. If you want to continue to renew every couple of months, we can do that. I will commit to implement the marketing plan which we agree is most likely to accomplish your objectives, and we can agree upon the budget. We’ll just shift to a standard seller-funded marketing model.”
(At this point, you may need to say, “Wait, hear me out on all three options here – there will be one you’ll like.”) “With the short term listing and seller-funded marketing arrangement, I’ll agree to refund ___% of the marketing costs at closing."
(This of course assumes that you are the closing agent!)“Option three: The last option (unless you have another to propose) is that we continue to work together with a listing term that reflects the reality of today’s market, and gives my team and me a FAIR chance to sell it, so that I can invest in the marketing of your home and have the necessary time to work the active buyer prospects we have. I’ve written 12 months in the listing extension agreement. That seems fair to both of us."
(Be sure to give yourself adequate time based on the market conditions.) “What would you like to do?”
Obviously there is some risk of losing the listing, but it seems to me the higher risk is spending lots more money and still losing the listing. It’s time for him to get serious about selling his house. If he expects an agent to upfront the marketing time and dollars without a fair chance of getting the home sold, he is really not going to get anyone’s best effort – the risk for the agent is too high. He needs to understand this and recognize that he wins with an agent who can afford to make the investment of time and dollars in selling his home.
If you are interested in more scripts, be sure to participate in our June webinar for members. Top agents will share the specific scripts and strategies they are using to stay successful in today’s market. Watch your email for more information.