What’s one of the most difficult parts of a REALTOR®’s job? Managing a seller’s expectations about the value of his/her home, says international trainer, speaker and coach Jackie Leavenworth – better known as “Coach Jackie.” Here are six tips from Jackie that may help make your next pricing conversation easier.
1. Understand your seller’s pricing expectations. The No. 1 mistake agents make is to discuss pricing before they understand the seller’s expectations, explains Coach Jackie. “When the sellers’ desires are not met, they aren’t happy. My job is to learn what the seller is hoping for and then create a dialogue that will help bring his/her goals closer to reality.”
2. Ask the right questions. Asking the right questions, even before visiting the property, can help you learn more about the seller’s listing price expectations. “The first question I ask a seller is: ‘Do you think the [real estate] market is working in your best interest, or working against you when it comes to getting what you want for your home?’ And then, I just sit back and listen,” Leavenworth says. “I let the seller know I’m going to do a lot of research, that I know his/her market very well, and that I also know each home has its unique selling advantages. So, my second question is: ‘When I do my research, what price range do you think I should use to start my study?’ The seller will tell you every time! With that information, you will know whether your seller is in touch with the reality of the current market.”
Too often, agents may start the pricing conversation by asking the seller what they think his/her home is worth – a question that invariably backfires. “If I say, ‘What do you think your home is worth?’ the seller may say, ‘Well, isn’t that why you’re coming out here? Aren’t you going to tell me?’” Instead, Coach Jackie asks the seller how he/she arrived at the suggested price range. “The seller usually tells me their neighbor’s house sold for a certain price, or that he/she paid this amount for the house, then put this much into home improvements, or got an estimate from a website.” Which brings us to another tip…
3. Find out what research your seller has done. One of the biggest mistakes agents make is overlooking what the seller has most likely learned online. “Agents always tell me, ‘Well, I’m not checking the estimated market value online, because it’s not right.’ But if an online source told your client his/her house was worth $525,000, and you tell them it’s worth $450,000 to $475,000, the seller is going to want to believe what he/she has found online. That’s why you have to be prepared to address the seller’s expectations.”
4. Use the facts. Coach Jackie advises you to come prepared with one important piece of information – the sale price to list price ratio for that price range in that market. “I tell the homeowner, ‘Right now, sellers on average are getting around 98.2 percent of their final list price. What that means to you is that any offer of 98 percent or better, we should be very happy to work with.’ What you are doing is taking their expectations from the 100 percent mark, where sellers always start, and bringing them closer to reality.”
5. The market will respond. Coach Jackie says, “Price is a process. We market the home, we position it in the marketplace, and the market responds to the home. And if the market doesn’t respond in a way that will get the seller where he/she wants to go, on time, then the seller needs to respond to the market. It’s a cycle, and we just keep going.”
6. Let the seller set the price. Finally, don’t make the mistake of setting the price of the home. REALTORS® who do so make themselves accountable for selling the home at that price – a difficult proposition at best. Instead, suggest a range based on all the research you have collected. “Ask the seller: ‘Where would you like to set the initial market position for your home, so we can see how the market responds?’”