Have you noticed that every seller thinks their house is worth more than it actually is? If your client has unrealistic pricing expectations, you’re not alone. In order to help your buyer to help themselves, my 2-step listing strategy will ensure that your seller comes to terms with a realistic price range for selling their home. While it’s completely natural for a person to overvalue their house, it’s your job to help them evaluate this decision logically.
Following this listing strategy will allow you to do two things:
- Help your buyer to determine, on their own, that they’ve overpriced their property
- Prevent the home from accumulating too much market time before the listing is tainted
As agents, our job is to help our clients navigate the entire home selling or home buying process. However, part of this process is telling them the (sometimes) ugly truth when it comes to the market value of their property. Telling them what they want to hear and moving forward with an overpriced listing will only prove detrimental in the long run.
This listing strategy largely revolves around pricing positioning.
Pricing Positioning 101
Pricing positioning is vital for the successful sale of a home, and the initial list price is the most important part. The first 2 weeks on the market will be when the listing gets the most attention. While it’s crucial that you know how consumers search for real estate online, it’s more crucial that you know how to communicate this to your seller. They need to know how buyers search and what that will mean for their listing.
The #1 criteria for online property searches is price. People tend to search real estate databases in increments of $25,000-50,000. The initial price a house is listed at could potentially exclude a huge section of the market. For example, a group of potential buyers may have set their search terms at a maximum price of $300,000. If you start your listing price at even 1 cent higher, you’re going to miss everyone who’s cap was $300,000. If you were to list the property at $299,000, you’ll be including a huge portion of the market that could have missed your listing completely.
It’s best not to “test” the market at a higher price. The reason is simple: the more realistic your price, the more likely you’ll get more traction on your property. The more showings you have, the likelier you’ll be to have a bidding war on your hands that will get you to your desired price anyway. It’s better to risk losing out on a few thousand dollars than accumulate too much market time and invite lowball offers in—because this will happen.
If Your Seller Has Unrealistic Pricing Expectations
It’s easy for you to come up with a pricing strategy for a property, but it’s another thing to convince a determined seller to agree. If they’ve set unrealistic expectations about their home’s value (which many do), your job is to skillfully steer them in the right direction. You simply need to implement a pricing strategy.
If your seller is determined to start the listing high, go ahead and agree to it—as long as you get them to agree to a price reduction when certain criteria are met. Agree to list at their price for a certain period of time (i.e, 1-2 weeks) only if they agree to do a price change if the level of activity is not where it should be after that time period. This allows you enough time to reposition the listing before too much market time has tainted it. AThe seller also is able to see firsthand how price affects showings.
No matter how horrible a listing’s marketing is, it will get showings if the price is right. If a property isn’t receiving any attention, chances are the pricing is wrong. Repositioning the pricing on a house is the easiest way to get offers coming in. Having a set, pre-planned pricing strategy in place ahead of time will make these adjustments easier if the time comes where it’s necessary.
Explaining Market Time To Your Seller
The second part of your listing strategy should include market time. As an agent, you know that nobody wants to buy the house that nobody else wants. Your job is to create a sense of urgency when listing a home, as this will ultimately generate higher offers and the most attention.
Market time should be explained to your seller when it comes to agreeing on a list price. Not only will it help them understand the reasons for starting at a certain dollar amount, but it will also help them see the consequences of waiting too long to do a price change. Clients want to have multiple options and multiple exit strategies. Therefore, if they insist on pricing their home above what it’s worth, at least they’ll know the effects that this may have on market time and the successful sale of their home.
How Knowing Market Time Helps Agents And Sellers
You will invariably come across a client that is too emotionally invested in their property to price it rationally. This strategy will give the seller what they want (a higher starting price) while helping them understand the impact their decision will have on the home selling process. If they don’t get any offers, they’ll at least have heard it from you first and will be less likely to blame you for lack of interest. Additionally, they will also be more likely to be receptive to a price change, having seen the necessity of it for themselves.
Ensuring that your clients understand price positioning and market time is vital. Not only will it give your seller more options and help them sell their house quicker, but it will also provide you with a backup plan should they insist on a higher starting price. When they see that you’re informed and are looking out for their best interests, you’ll wow your clients and show them that you truly know the real estate game. And chances are, they’ll refer you to their family and friends and come back to you for their future housing needs.
