Pricing: Take Your Sellers for a Ride
Pricing: Take Your Sellers for a Ride
No, the title of this article probably doesn't mean what you think — we're not going to take your sellers on a one-way trip to a deserted place, and we are not going to con them. What we are going to do is conquer, once and for all, two complaints I get really tired of hearing from real estate practitioners.
First, there are the agents who can't sell a property and complain bitterly that the property was always overpriced. Saying it was always the seller's fault is their misplaced blame for not being able to sell the property.
Second, there are those agents who complain that they’ve lost a listing to another salesperson who indulged in the practice of "buying the listing" (that is, telling the sellers they would achieve a higher, unrealistic price, only to win the listing and then gradually convince the sellers to keep lowering their price).
Look at What Research Tells Us
There are three important pieces of information that potential buyers look for in any real estate advertising: price, location, and number of bedrooms. If research shows that these are conclusively the top three pieces of information potential buyers require, then common sense says give it to them! I make mention of that fact because, depending on which country I am working in, I see some or even all of those pieces of information left out of the advertising. How illogical is that, flying in the face of what research tells us?
In countries such as Australia and New Zealand where auction is a very popular and often a very effective way of selling homes, many agents leave price out completely — not even an indication of price to be seen. This leads to many disgruntled potential buyers who probably should never have attended a particular auction in the first place because they have dramatically misjudged the price of the home.
Research from the Australian Real Estate Institute says that as many as 58 precent of potential buyers will not ask any for any further information on a property if the price (or at least a price indication) isn’t included in the ad.
Price, therefore, is vitally important, and it’s your job to communicate that importance to your clients.
Consultative Selling Means Teamwork
Instead of selling at potential sellers, consultative selling is when the real estate professional works as an expert consultant alongside the sellers. So, pricing is obviously vital, because if the salesperson and the seller can't agree on pricing before the relationship starts, then the pair are never working properly as a team.
This is when the real estate practitioner needs to have the courage and integrity to walk away from a listing, while offering any assistance the seller should need in the future. I have seen this happen time after time, and when the salesperson impresses the seller with their honesty and integrity, they usually still end up with the listing.
So, how do we get closer to real agreement on a realistic price?
By taking the sellers for a ride.
Explain Your Pricing Strategy
The ride should always begin with a competitive market analysis outlining exactly what has sold in the client’s area, right up until yesterday. This is the kind of information a seller should be able to expect from their real estate "expert."
Impress upon the seller how important it is to be working together on the same goal — price — in mind. Tell them you need to spend a little time with them and take them for a drive. Armed with the CMA and your digital camera, you then visit several homes that are similar to theirs that have sold in recent times. Photograph the homes and compare what they have to offer: not just the home itself, but what the surrounding area offers.
For example, two homes that would appear to be identical can be priced quite differently if one is adjacent to a park where children could play, pets could be taken for a walk, and adults could just relax, stroll, or picnic. The price difference is quite dramatic between beachfront homes as compared to one street back from the beach, even when the physical characteristics of the properties might appear to be the same.
Once you return to the seller's home, armed with the photographs, your CMA, and the actual comparisons of real homes with actual prices achieved, it is normally a much easier exercise to reach agreement on what a realistic price goal should be.
In my experience, sellers are highly impressed by the integrity of the real estate professional who takes the time to drive sellers around to make those comparisons. It sets that salesperson apart, because 90 percent of agents would never consider it. Therefore, it’s a unique selling point.
Also, if another salesperson tries to "buy the listing" by inflating the expected selling price, the seller has now been armed with the correct information in the most honest possible way. As much as they would like to believe an inflated price they are presented with, they realize it's not right and they may question the integrity and advice of that other agent.
So, taking your sellers for a ride has some great advantages and will win you many more listings.
Location, Location, Location
An agent in one of my classes was buying a house himself — he had been to see this particular home and thought it was okay, then arranged for his wife to view the property with him and the REALTOR® who was selling it. When they arrived at the property, the wife had one look at the front of the house and said she hated the property and there was no chance she would agree to buy it. She was not even going to get out of the car.
Eventually, the husband managed to get her (very reluctantly) to walk into the house, convincing her to be polite out of respect to the REALTOR® who had met them there. They’d have a look and then tell the agent it wasn't for them.
However, once the wife walked into the house and, particularly, walked onto the expansive back deck and veranda, with a beautiful view over a nature preserve, she fell in love with the property and they bought it.
This is a perfect example of when an ad showing the front of the house would never have worked. Also, giving clients the address in advance of your arrival to show them the house would also never have worked in this instance, either, because the clients wouldn’t have gotten out of their car.
Be Honest About Bedrooms
Sometimes I notice that the agents leave out the number of bedrooms, most particularly when it only happens to be one or two bedrooms, as they somehow feel that might put off potential buyers. But they will "sell" them on the property when they phone to see how many bedrooms it has.
The truth is, this tactic doesn’t work. If there are two properties advertised side by side that appear to satisfy the buyer’s needs, one property telling the number of bedrooms and the other not, guess which one the buyer will phone first—obviously, the one telling them how many bedrooms. Don’t make potential buyers play a guessing game.
In my next article, I will give you an insight into a unique process in practice in Australia and New Zealand, where the seller’s agents obtain advertising dollars from the sellers. That's right: They get the sellers to pay for the advertising campaigns, often worth many thousands of dollars. And many of these sellers come back as repeat clients with their next home for sale, time and time again. I'll show you why it works and how it’s appearing to be very successfully in other markets and countries around the world.
This article is part 9 in a 10-part series on writing great real estate ads. Read more here:
Part 1: Effective Advertising: It’s All About ‘HOODOO’
Part 2: Write Ads That Sell
Part 3: Match Powerful Photos With Powerful Headlines to Get Ads Noticed
Part 4: Show What It's Like to Live in a Home
Part 5: Humanizing Your Ads
Part 6: Different Ads for Different Markets
Part 7: Media Match: Make all Your Ad Media Work Together
Part 8: Keep the Same (Good) Ad Running
Part 9: Pricing: Take Your Sellers for a Ride
Part 10: Getting Your Sellers to Pay for Advertising
Bonus Tip 11: Research Your Advertising to Guarantee its Effectiveness