Q&A MEMBERS CALL: What If Your Seller Insists on Overpricing Their Property?

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Transcript:

Greg says, "What are the best resources for being a market expert?"

We use two resources. We use Keeping Current Matters, which my agents really like, with Steve Harney. It's once a month, and he's got a bunch of different tools. They actually have a blog as well.

Then we use Clarus Market Metrics. This is the one where there's pricing and market analysis. You can get very specific. I highly recommend it, but in some markets it's not available.

Game-Changing Pricing Analysis

This is a game changer. Let me go to "Pricing Analysis," and I'll show you the one slide that is a game changer for getting properties priced properly. You can target by zip code, price range based on what they think the home's worth and what they think it's worth, and then we just do a search.

There's one chart in here in particular that usually tells exactly the story you need to tell. When I was giving listings - and this is with regard to pricing - our process is we prep for the appointment, do the seller interview, all that ahead of time. Pre-list packet goes out, the listing agent gets to the door, they do the walk-through, they build rapport (the only reason to do the walk through).

We don't pick on the property. We sit down, and then we get into the market and show them that we're the expert.

There's a series of other slides. There's market dynamics and pricing analysis. You talk about inventory and absorption and all that good stuff. But this one is one you'll come back to over and over again.

What to Tell Sellers

This tells the story exactly the way you want it to. You'll say, "Mr. Seller, let me go through this. There's 3 outcomes here. You could be a dot that's not filled in, someone that's listed their home for sale and sold it without requiring a price reduction. Then you could be a filled-in dot - so they sold their home, but they had to have a price reduction. Or you could not be a dot at all on here. There's a full 50% of houses that are listed that don't make it on this chart in terms of selling during their listing period.

"Let's look at the data here. For sellers that price their property correctly, they priced their property at an average of $424,000, sold for $417,000 (1.6% off their original asking price), in 33 days with no price reductions. For those that missed the price out of the gate that cheated on the high side, they priced their home almost at $450,000, so $25,000 higher. They sold it for almost exactly the same amount, but 7% off the original asking price. It took them 3 times as long to sell, and they had 2 price reductions on average."

So off script here, the good thing about that is saying, "We can choose one of 2 paths. We want to have a successful outcome. If we don't get the interest we need, if we don't get the showings, we have to respond. We have to get our price changed. If we miss it out of the gate, and we don't get an offer close to our asking price, we've got to on average reduce it 2 times to get it sold. Or, we could not even be a dot on this chart, which is not the outcome that we want. Either way, you're gonna get the same price for the property."

They just started adding this, and sometimes it doesn't, but this data shows that they actually got less. For the properties that sold, it turns out that this batch of 23 homes were bigger and sold for less per square foot.

This is a powerful chart. If you can get Clarus Metrics in your market, you've got to get it. It's got a bunch of other charts, but this chart is the one you're gonna keep in front of you as you're pricing your home. As they're making that bad decision to overprice their home at $450,000 - the numbers don't always work out where you can use them, but sometimes they do.

You can say, "Okay, I'm not going to lose this listing over price. But if the market doesn't respond, we know the path that we're on. Can we at least agree on that?"

Then at least you can set them up and be honest, but not lose the listing. This helps educate them on the process, that there is no magic. There's no way to get a buyer to come in and overpay for a property when real estate is a pretty efficient market.