Andrew Wetzel's Musings

May 26, 2017

How do you ‘sell’ a price reduction to your real estate clients?

Filed under: Uncategorized — awetzel @ 4:04 PM

When sellers determine their asking price, they pick their competition.

We all know that a price “adjustment” means a price reduction, don’t we? Dress it any way you like, it is difficult for many of us to mention the subject no matter how necessary the conversation may be. Many of my clients tried unsuccessfully to sell their property with another agent before they met me and many of them said that their agent never suggested a new price.

As a professional, I assume the role of director and lay the ground work from the outset. The best I can do is to market a home effectively (meaning the people who may be interested in it can find it in their searches) but the simple fact is that real estate is a product. The consumer is better equipped than ever to evaluate, compare and decide whether to make an offer and what kind of offer to make.

The consumer might have a well-prepared real estate agent and most will use lender-financing which means they need the blessing of an appraiser. What happens “in between” will determine whether we, as the listing agent, get our seller clients to the finish line.

Other than selecting their agent, pricing is the major variable at the sellers’ disposal (it is controllable to some extent, depending on what they owe and what they need going forward). It directly impacts their proceeds which might determine whether they can sell and what happens after settlement.

Asking prices are assumed to be flexible. Depending on the local market, it is either the ceiling (the high point) or the floor (the starting point) for negotiating. Does it correlate with the location, features, condition and competition, including history? Are you getting showings? Offers? Feedback?

My point is that if sellers are not getting offers that interest them, one of two things is most likely happening. Either buyers are finding what the sellers are offering at a lower price OR buyers are willing to pay your sellers’ price but expect more for their money. Showings are great but that is NOT the goal so do not be misled by them.

Reducing for the sake of reducing might suggest that you are grasping at straws, which undermines your credibility. I tell my clients that a price reduction must accomplish one of two goals:

  1. One goal might be to convince those who are aware of your listing to see it, or if they have seen it, to make an offer.
  2. The other is to change or re-position your listing within a lower “search bracket” so that it can compete better and come out in different “search results” exposing it to a new clientele.

Although the local market might affect an otherwise attractive asking price, the sellers need to decide whether they are more motivated by achieving a certain price or by being to able to move within a particular time frame. Waiting for a better price may take time. If a seller is going to buy you have to know how they may impact a future purchase. Wanting to sell more quickly typically means selling for less.

It is our duty to ask the right questions, to formulate a game plan and to advise our client throughout the process.

Adjustments are not a sign of failure as long as we lay the groundwork and monitor the process.

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