Pricing unique homes is never an easy task, and a shifting market makes it even more difficult.
In a shifting market you will most likely have to take some listings at a higher than you feel you should, knowing that if you don’t take them someone else will.
Because any listing can be expensive to carry when you look at the money and money invested, it is critical to make wise decisions when structuring your marketing budget. For this reason you need to know when it would be best to turn a listing down.
As the old Kenny Rogers song says, “You gotta know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run!” Certainly there are some listing opportunities you will want to run away from!
At Excelleum, we encourage our coaching clients to set their budget to know exactly what they will spend per property, and to also factor in the approximate hours of staff time and of their own valuable time. Next, look at each listing opportunity, not out of desperation or fear someone else might take it away, but instead measuring it by the likelihood you will get paid and receive a solid return on your investment.
Standards to consider as you determine the listings you want to take on:
- Seller motivation. Even if they are not ready to move quickly, over time is there a strong enough motivation that they will eventually adjust the price?
- The sellers. Are they high maintenance and likely to drive you crazy? Or fairly easy to work with? Remember, you may have to deal with them for quite some time so this is an important consideration.
- The property. Is it hideous, in a poor location, or in an area that has low demand? Are there any other strong negatives against it?
- Will you be able to create other money making opportunities by having it?
- Have you told the sellers the truth about where you feel it needs to be?
- How high above your recommended price is the limit to how high you will go?
- Will they give you a long enough listing so that you have time to ultimately get it sold?
Once you sign the listing and have it back in your hand, prepare to spend another 15-20 minutes preparing them for what is ahead. I call this the setting the expectation portion of the meeting.
The 21 Day Point
At this point it is time for a strong conversation about the market response. Try to obtain the first adjustment, or at least set the stage for one very soon.
Remind the sellers that even if they are not in a hurry, days on market are transparent and will work against them as they stack up.
Make sure you have a strong seller service plan to send updates and call them each week if possible. Strong communication keeps them happier!
When they ultimately agree to a price adjustment, make it significant enough to make a difference. Years ago I read something that stuck with me. “If a property has had zero activity, you can assume it is at least 10% too high. If it has some activity but no offers, it is most likely at least 5% too high.”
I am not sure how the author arrived at this conclusion, however I have since used it hundreds of times in my career and it actually worked and seemed to be true.
Bottom line, most sellers will only tolerate a couple of price reductions before they lose their mind and start blaming you. Therefore you need to ask for a big one, knowing they are always going to cut you back anyhow.
As you work the listing, be honest and direct as you do your weekly calls. Remember to instill tough love, practice empathy not sympathy, and tell yourself that you are the doctor and they are the patient. Tell them what they need to do and be calm but firm.
If they keep saying no, you must keep asking. It is your job and you owe it to them to do what they hired you to do, get it sold!
If you are going to keep the listing, you must keep asking!
And if they refuse to adjust, you may want to request an extension on the listing back to its original term, assuming you want to keep it.
Key points to remind your sellers of:
- The easier it is to show, the more likely it will be to sell.
- Buyers are demanding when it comes to condition, so clean it and stage it!
- If the market is responding, move quickly so that you won’t be chasing the market down.
- If you have an offer and issue a counter, adjust the price to the price on the counter in order to create pressure on the buyer you are negotiating with. This will also notify the market of the seller’s willingness to take less.
And remember, you can’t want it more than they do, so do your best and that’s all you can do!
To learn more about how we can help you through this process, as we do with the clients in our coaching programs, visit http://businessstrategycall.com/