If a home you have listed has been on the market for longer than you know it should be, it is time to address that with the seller. First, honestly assess whether the home would have likely sold if it were priced lower. If the answer to that question is “yes,” you have to work with the seller to get the home priced in line with the market. Every day that a home sits on the market without getting an offer could be a strong indicator that the home is priced above the market. It is your job to articulate the importance of getting it priced correctly to your sellers, get the price reduced to where it needs to be to get an offer, and to get the property sold.
Many sellers are highly resistant to a price reduction because they believe that eventually the “right person” will come along and pay the price the sellers are asking. And if they are not in a rush to sell, then they feel that they have time on their side. This, however, is a strategy that rarely works and more time on the market rarely serves a seller well.
Most real estate agents are not comfortable with going back to their sellers and sharing that their home isn’t going to sell at its current price. Sellers are sometimes upset with the agent for recommending that price in the first place and disappointed that the money they expected from the sale will be less. Either way the discussion is a difficult one.
The key is to set expectations up front at the listing presentation. Explaining the importance of active pricing up front can save you from surprising the seller with a difficult discussion later on. Active pricing starts with a list price reflecting the moment of the market when the home is listed. Active pricing requires you to watch the market every week for changes and adjust the price accordingly.
An agent should never promise a seller that their home can be sold for a specific price because only the market and the inventory in the market dictate that. The agent’s job is to interpret the market information for the seller and help the seller come up with a pricing strategy that will get results. If inventory decreases while the listing is on the market it may mean that the seller’s home will soon be consumed by the market, but if the inventory increases and the home is not getting showings or offers, then it is essential that the agent talk with the seller about reducing the price of their home.
Many sellers can come up with good objections for doing a price reduction but it is your job to get the seller thinking with some powerful “what if” questions. The questions could include the following:
- “What if your property does not sell at the current price?”
- “What if buyers won’t pay this price for your home?”
- “What if we do this price reduction and it generates an offer?”
- “What if it we don’t do this price reduction and we continue to get no showings?”
The critical thing for the agent is to be able to get the seller more focused on the reality that they may be overpriced. Asking “what if” questions are a wonderful way to get the seller thinking about the ramifications of keeping their home overpriced and to help sellers to price their property correctly. Without the “what if” discussion, the days on market can add up quickly and it could take you significantly longer to get overpriced listings reduced to be competitive in the market.