There’s nothing more frustrating as an agent than putting a lot of time, research and effort into a listing, only to have the seller insist on overpricing the home.
Before you can get a seller to agree to a realistic selling price, you have to understand why they insist on overpricing their home in the first place. Try to see this process of selling their home, their largest financial asset, as they do. To do this, you need to establish trust and confidence, set good boundaries, understand their fears, and show them the reality of the market. Here are five tips to help you handle the “elephant in the room” and work through these tricky situations.
1. Understand where they’re coming from
Selling a house is easy. Selling a home is hard. Homes are where memories are made, where families grew up, and where emotional, difficult, irreplaceably precious things happen. Sellers who overprice their homes are usually including the emotional value of the property to the appraised, physical value. When you understand this, you can begin to separate the emotional value from the physical value and help your clients do the same.
Begin by asking them what they think their home is worth before you share your valuation of it. Don’t react to their response, but do ask them how they arrived at this price. Did they get an appraisal? From whom? Can they show you the appraisal in writing? Be curious, not defensive, about their process. The more you understand how they arrived at this value, the easier it will be to counter their findings. It’s always better to ask them to explain their process than to counter it with reasons why it’s not realistic or appropriate. Asking the right questions will help them come to this realization faster.
Once they’ve shared their price, they’ll want to know what you think the house is worth. This is the time to show them your process — when they’re asking for your numbers.” Garry Wise gave the advice, “Never tell a seller ‘this is what your home is worth.’ Instead, say something like ‘The Market is willing to accept $280,000 for your home given all of this data.’” You can then supply your clients with their customized CMA report that shows how you’ve factored the value of their home. The key is to show the seller that you have all the data and not just an internet guess at what their home is worth.
2. Have the difficult financial conversation
Sellers are often ashamed or embarrassed to admit they need the money from a higher-priced valuation sale. It’s easier, in their minds, to ask for $10,000 more from the sale of the house than to raise that some other way. Maybe they lost an income, got laid off or are having financial difficulties they simply don’t want to share with you. Maybe they owe more on the home than it’s worth. This “elephant in the room,” is what is keeping you from convincing them to lower their price. They believe they need a certain amount to make it worth their while to sell their most feasible chance at financial rescue.
Have they recently sold or traded cars or other big-ticket items, claiming they’re downsizing? Do they talk about getting a condo or a “smaller home” after selling this one? If so, finances, not reality, may be the issue here. If they are experiencing financial difficulties, address the problem head on. Say, “You know, some of my clients set a high price on their homes, hoping to pay off other bills. It’s a great strategy when the housing market is different. However, it can backfire and leave the house unsold, maybe even ending up in foreclosure. I don’t know what your financial situation is, but I see this often, so I need to ask you so we can strategize.”
3. Explaining the 10 days or 10 showings rule
If other properties around them are selling quickly (within days of listing) theirs will too — if it’s priced realistically. If their listing has been on the market for 10 days with no showings and no offers, it’s time to drop the price. Explain to them that the bulk of showings will take place in the first 3-4 weeks of it being listed. If they wait too long to drop the price, their property will be presumed to be overpriced by other agents and buyers, and not be shown.
Build the price-reduction process into your contract, so you don’t have to go back and convince your sellers to lower their price. Remind clients that this is not personal, but practical. If you explain this process during your first meeting, you’ll save yourself a lot of future headaches. The first meeting is when clients are typically more open to hearing how things work, and what they can expect from you.
When a client wants to list for $350,000, and you know the house won’t sell for more than $210,000, invite your seller to go on a home tour with you. Show them what a $350,000 home looks like. Most people can’t imagine a $140,000 difference, but when they see that a $350,000 property is bigger, nicer and more luxurious overall, it sells your client on a reduction without you risking offending or angering them. You’re just showing them what a real $350,000 home looks like.
5. Create a buyer feedback system
The results of this buyer survey will go directly to both you and your seller. That way, the seller gets feedback about price directly from buyers. They’ll realize it’s not just you thinking the price is too high, but the market does too. Not only will the emails give you a reason to approach your seller, but they may also even initiate the “Maybe we should lower the price” conversation you both need to have.