It depends on how much effort the seller is willing to contribute
- When sellers are in a hurry, you’ll need to price the home aggressively to get offers within a few days.
- The price you set will be directly affected by the seller’s ability and willingness to contribute to the presentation of the listing.
- It’s your job to convey to the sellers the importance of cleaning, staging, and taking care of needed repairs — or lowering the asking price.
Many agents fall victim to letting the client make all the decisions on pricing. This happens in part because the agent may be unsure what the home will sell for, and therefore they let the seller dictate how the home will be priced. Sellers often base their pricing on the amount of work and money they’ve put into it.
When I first do my research to see what the house might sell for, I come up with a range: high end to low. Until I know how much effort the seller is willing to contribute toward the presentation of the house, I don’t know what price I’ll be able to set within that range.
To fully understand how to price a home, you need to fully understand the context of the situation. Meaning you need to understand your clients and any variables that could affect the pricing of the home.
Here are a few things to consider when your seller is in a hurry:
Often you have a seller who is unable (due to being out of money, out of time, or out of patience) to do anything with the home to make it show better to potential buyers. In these cases, it’s critical that you explain to them how that will affect the price they’ll get for the home. They’ll need to price it accordingly to avoid the home sitting on the market for an indefinite time.
For example, the homeowner needs to sell within 30 days; therefore, you’ve got to price the home aggressively to get offers in just a few days, likely at the bottom range of what you had previously thought you could sell it for.
If they don’t have time to do everything you recommend, hopefully they can do a few things like clean and stage the house. Other clients may just want out, so they don’t want to raise a finger or spend a dollar on the home to get it ready to sell.
If you take a listing with sellers who are unable or unwilling to take the recommended steps to get the best price for their home, here are the potential problems:
It might impact your reputation – If you can’t sell it because they’re not doing the things they need to do — either because they’re out of money or out of options — and it sits on the market forever, that doesn’t reflect well on you.
You might need to walk away – If they won’t agree to the price and the price schedule you’re recommending, you might need to walk away. If you don’t see a positive outcome — if the price they want and the timeline they need to sell it by aren’t realistic for the level of improvements they’re (not) willing to make — then why would you continue down a path to failure when it’s clear that it’s not going to work out?
You might need to assist the seller financially – If they’re out of money but have equity and they need to do repairs, you may need to give them options to help pay for the work up front. Maybe you arrange an extra large commission and you pay for the repairs up front, so you get reimbursed at closing. You decide if that’s something you want to do, or how you want to operate your business.
It will be tougher if they have no money and no equity. That limits your ability to drop the price, so you need to be more cautious or creative on how you help the sellers.
Hint: It’s something you can do for yourself
- Coaches can provide accountability and motivation — but so can spouses, coworkers, and brokers.
- Share your goals with your social circle, and ask them to hold you accountable — peer pressure is a powerful motivator.
- Be your own consultant, and look over your business with a critical eye — you’ll be surprised by how many ideas for improvement you find.
Accountability. That is the number one reason many agents pay over $1,000 a month for a coach. Does that mean they can’t find other ways — even free ways — to hold themselves accountable?
Here are some alternative (free) ways to hold yourself accountable:
- Set goals and write down the dates you want each step completed.
- Tell other agents in your office what goals you’ve set and ask them to hold you accountable to your timeline. Ask them to check in on you and ask you for progress reports.
- Ask your broker to check in with you on a weekly or monthly basis on your goals. Any broker or office manager should be happy to help you hold yourself accountable to your goals.
- Tell your spouse and family members. Ask them to support you and hold you accountable.
- Announce your goals in a social group, on Facebook, or at an office meeting. Tell them when you expect to complete each goal and offer to buy them lunch if you don’t meet your timeline. Peer pressure is a powerful thing.
Be your own guru
Have you ever noticed that it’s easy to give good advice to others, but somehow with your own life or business you often don’t take your own advice?
A good friend shared with me a great way to solve this problem. She has a standing appointment with herself every day at 11 a.m. She pretends she is meeting with an experienced professional (with much more confidence and experience than she has), who values the same things she does, and she has that professional examine specific areas of her business.
For example, she will look over her company website with a critical eye like a paid consultant might. She pretends she is that consultant and looks for ways to make the website better, and makes notes on what isn’t working.
She told me that, surprisingly, she gets a clear answer or solution every day. It makes her honest about what she knows deep down that she needs to do better. She then implements the changes, which means she is improving her company every day.
The point is, you don’t always have to pay someone to tell you what you already know, but you do need to find a way to consistently tap into your own knowing, to trust your own advice and make time to implement it.
The noise of the gurus, trainers, coaches, and experts will become significantly quieter by implementing your own advice first. Write down your goals, set deadlines for mastering them, and then do it. Hold yourself accountable by telling your coworkers, friends, and family your goals and timeline as mentioned above.
If you do that, the noise from the gurus is going to get really quiet, because you’ll be too busy implementing your own plans and changing your business.
Master the art of presentation and visibility before lowering the price
- Clients hire you to sell their home for the highest possible price — so don’t accept common advice that dropping the price is your only option for a quick sale.
- Focus on presentation to assure your listing is immaculate online and in person.
- Make sure your listing has peak visibility to reach as many buyers as possible.
You have a listing that won’t sell. You reach out to your broker, fellow agents, coaches, and gurus, and what do they tell you? “It’s overpriced. Drop the price. Price is everything.”
It’s likely that you’ve given that same advice to somebody who asked you about a listing that wouldn’t sell. It’s an easy answer: Drop the price. If it’s been on the market for months and it’s not selling, it’s got to be the price.
It’s true — if you drop the price on a listing, someone will eventually buy it. But that’s not what the seller hired you to do. They hired you to sell it for the highest price possible.
Some agents convince themselves that it’s their job to make the seller “accept reality” and lower the price to a point where the agent thinks it will draw an offer — as though everything depends on price. The agent’s advice could potentially cost the seller tens of thousands of dollars. It could also cost the agent months of unnecessary headaches as he continues to drop the price and wait for an offer. It might even cost him the listing.
Why do agents lose listings?
A listing is lost when a home doesn’t sell after months on the market. The sellers may feel that another agent could do a better job — or they might convince themselves that the home will never sell and take it off the market. In either case, it’s an awful situation for the agent who has put a lot of effort and money into the listing with no return.
There are things you can do as a listing agent to help your clients and prevent those issues from ever arising. If you follow the principles of the Listing Triangle, those problems should never be an issue for you.
What goes wrong with a listing?
You get a listing, you work your butt off, you do everything you can think to do — list it on the MLS, get nice photos, host open houses often — but the property won’t sell. Your clients won’t drop their price any further. You blame the sellers for not lowering the price.
In fact, most real estate books, trainings, and gurus will teach agents how to avoid this outcome by learning the skilled art of getting the seller to lower their price. Some agents do this before they even take the listing — they get the seller to pre-agree to lower their price after so many days.
When agents focus solely on price and use the skills they learned from their broker or trainer to basically beat up sellers to get them to lower their price, they’re perpetuating the bad reputation that real estate agents have earned.
How many sellers have you personally heard saying, “My last agent was only focused on dropping the price”? That’s how people feel when that’s the only solution an agent brings to the table once they do the work up front. Clients aren’t sure what their agent does after a property is listed. They’re not sure what options they have other than dropping the price.
There is always something else an agent can do to alter a listing besides dropping the price that could better the odds of that home selling. There’s always more that can be done to make that property more appealing. It might need both a lower price and changes in visibility and presentation. Price, visibility, and presentation are equally important — which is why I call this the Listing Triangle.
You need to become not just proficient but truly a master of each corner of the triangle, to know with absolute certainty that you are doing everything you can to net your seller the highest price for their home.
Build your marketing efforts around this one inexpensive strategy
- The marketing strategy that will have the biggest long-term payoff for your business is easy and inexpensive — personalized note cards.
- Share stories about your family, and ask about theirs — take the opportunity to build relationships.
- People will use and refer the agent with whom they have the deepest relationship.
What’s the number one strategy you can adopt today that’s going to have the biggest long-term payoff for your business? You might be surprised, because it’s so damn easy and inexpensive.
We’re told we need to do these different things to improve our business — build a new website or get the new customer tracking software. We’re told we are not making enough prospecting calls or doing enough for-sale-by-owner campaigns.
I have tried what seems like a million different strategies, but going back to basics really works best for most agents. What I am talking about is … note cards.
An agent in my office writes ten note cards a week. That’s his entire business model, essentially all of his marketing. It costs him maybe five bucks a week.
Every Monday it’s on his to-do list to identify ten people to contact that week. He had some doubts about the strategy when he started doing it, because it took some time for it to work. But now he’s one of the top-selling agents in our office, and that’s almost all the marketing he does to generate a healthy living from referrals.
What should I write?
Please don’t say, “I am never too busy for your referrals.” Not only are five other agents sending your contact that exact same slogan, but it comes across like you’re begging. You don’t have to beg for referrals.
Share a story about something that’s happened in your life, with your family, or whatever. You can reminisce about an experience you shared together. Ask them how their kids are doing in whatever sport they play.
Make notes after you have a conversation with someone, including their kids’ or spouse’s names and what they are up to, what you have in common, or what they find interesting or fun. Once you have a few notes about someone, you’ll find it easier to figure out what to write.
Your goal is to create a reason for them to go out of their way to refer you. If you send a personal note to them and remember their kids’ names and ask how they’re doing, you may blow them away. Their own family may not even do that. So you come across as someone who listened, cared, and took time from your busy day to reach out to them. That is rare in the world.
Why this works
What I have discovered is that even if I’m the best real estate agent in my marketplace and I can prove it, it doesn’t necessarily mean I’m going to get more business. It’s frustrating, but the fact is that people consistently use — or get a recommendation from — someone they know and trust.
When I get new business from the marketing I send out, it’s from people who didn’t have a relationship with somebody from whom they could ask for a real estate referral (which is rare). That’s why this is important. Almost everybody knows a real estate agent. Make sure you are the one with whom they have the deepest relationship.
Learn to put out this common fire before it blows up a transaction
- When appraisals come in low, it takes a savvy agent to salvage a deal between an irate seller and an excited buyer.
- Appraisers will often put in the extra time to reevaluate their findings if you show them respect and know how to bring them relevant information.
- Find information about comparable home sales that the appraiser may not have seen to support your offer price.
Bad appraisals happen all the time, and they blow up deals.
When an appraisal comes in too low, it takes a savvy agent to calm a seller who is freaking out and pissed off — or to manage the expectations of a buyer who now thinks a house is worth thousands less than the original offer. These situations are a recipe for disaster, and only an agent who knows what to say to each party will be able to move the transaction forward and find a solution.
Part of your job is to understand how the appraiser does his job, what rules he has to follow, and where the grey areas are. When an appraiser tells you he’s having a hard time coming up with a value to support the purchase offer, the last thing you want to do is say something that will piss him off.
For an appraiser to dig deeper — to look at your other sources of information and then make the case to support that new information — he’ll have to put in a lot of extra time. Appraisers are paid at a fixed rate. They don’t get paid extra to spend more time on their evaluation, but they often will if you show them respect and know how to help them.
If you’re lucky enough to have an appraiser who notifies the parties when an appraisal appears to be less than the offer, usually the appraiser will give you a chance to send any additional information that would help substantiate the offer price. This additional information might include:
- Knowledge you may have of other comparable home sales in the area that the appraiser hasn’t seen.
- Extra information about the comparables used in the appraisal, especially if you have seen that home and the appraiser has not.
The more you know about the appraiser’s situation and limitations, the better you’ll be able to put out the fire of a low appraisal
Agents need to make sure they hone their firefighting skills. Many agents believe deals fall apart outside their control. These agents will make far less money because they close fewer deals, while many of their transactions could be saved if they developed solid firefighting skills.
Agents who are skilled firefighters bring in more money and need to work with fewer clients. It’s an extraordinarily important skill to learn and master. The better you get at coming up with alternative options or workarounds, the more deals you will save. This has a huge impact on an agent’s annual income. Agents could save so many of the deals that blow up on them, if only they were more experienced firefighters.