One of the hardest parts of your job as a real estate agent is the ability to price a seller’s home correctly. There are so many variables that go along with accurate pricing and if agents do not consider all of these they may be costing their sellers thousands of dollars in lost potential sales revenue. More often however, because of the inability to price correctly agents walk away empty-handed without ever having the opportunity to sell the home because the price the agent came up with is not consistent with the seller’s expectations. Agents can spend hours doing CMAs only to find that what they are presenting to the potential seller(s) either wasn’t enough information, the right kind of information, or the information the seller wanted or expected to hear.
The key to pricing it right is a combination of laser-focused accuracy and gut-wrenching honesty. This means that you are required to not only do your homework but also be able to present it flawlessly. Sellers often want to play the “name their price” game with you, but if you engage in the game you will lose on all counts because you will either walk away with a seriously overpriced listing, or you will walk away empty handed because the seller won’t respect you.
If you can look at pricing as an essential part of what you do and an ethical part of what you do, it becomes a lot easier to tell sellers like it is. If your number one goal when you meet with a new seller is to tell them the market value based on all of your research – because it is professional negligence to do anything else – it makes presenting the facts about the price much easier for you.
Too many agents walk out of the listing presentation empty-handed or with listings that won’t sell because they are overpriced and doomed from that first ill-fated meeting. Overpriced homes don’t sell – period. The moment you embrace this idea is the moment you will be of greater service to your sellers and a better steward of your time and money.
Sellers want, need, and deserve to hear the truth, even if it is not the fantasy price they had in mind. The challenge is, of course, how you help a seller recover from the shock they may have when you deliver “the truth”? Always remember that taking an overpriced listing that won’t sell will produce long-term pain for both you and the seller. The short-term pain you may experience when you deliver the truth to the seller is much more preferable. But agents must learn deliver this news in a responsible and caring way.
Today I want you to really think about all of the listings that you have taken in your career where you knew in your gut that they were overpriced and would not sell. Did you take the listing anyway hoping and praying for a miracle, or for time to pass so the seller would eventually weaken on their pricing position? How many listings did you spend countless hours and hard-earned money in marketing without a positive result? Overpriced listings aren’t good for you, the sellers, your career, or your future business.
Make a commitment to run a business where the main focus is to provide 100% truthful pricing information, all the time. It shouldn’t matter what the seller wants or needs.
Could you imagine calling a stockbroker and saying, “I know I paid $200 for X Company stock and it is trading for $150 today. But I really need $200. Can we just put it out there at $200 and see what happens?”
Of course not. That’s not how the stock market works – and it’s not how the real estate market should work either.
Overpriced listings do not sell and they erode your ability to price correctly. Pricing correctly not only includes research skills, but fine-tuned communication skills, and the ability to back up your price with research, facts, and explanation.
So, the next time you walk into a seller’s home for a listing presentation ask yourself if the price you present, and ultimately list, the home at is the price you intended to present. Don’t allow an overly-optimistic seller to sway you from what you know in your gut is the truth of pricing.
This is part one of a four-part series covering pricing. Over the next three weeks we will be discussing:
- How to price a property with limited comps or an area without adequate sales history
- How to get sellers to see your point of view on price
- How to overcome all of the seller’s pricing objections
Join me next week when I address pricing a property with few comps. And in the meantime, get out there and be truthful about price. Your business – and your sellers – will thank you later!