In an ideal world, you’ll work with sellers who are receptive to your feedback about their property and trust your expertise. The ideal seller will listen carefully to your input and be open to suggestions and constructive criticism if it means selling their home quickly and for the best price. But this is not an ideal world and sooner or later, you’ll find yourself working with a difficult seller who is not willing to take your advice. They will fight you about staging, marketing techniques, and competitive pricing.
So what do you do, especially when it comes to an overpriced property? How do you help sellers see that their unwillingness to budge on the price will cost them in the long run?
Understand Their ‘Why’
Selling a home can be very emotional for sellers, especially if they are selling a home they’ve had for a while or that has been in their family for generations. A house is not a house to many sellers, it’s a place where memories were made. For these emotionally invested sellers, it can be difficult to put a price tag on such an emotional investment, which is why they choose to start high. During your first conversation, try to understand why they are selling and how they’ve come to the price they’re asking. Look at the situation as more than just another sale, and connect with the seller on a more personal level. Hear their story, understand their concerns, and make them feel seen. This can go a long way, especially for a seller who may be worried that the emotional burden of selling this home is going unnoticed.
Get the Appraisal
The first thing you can do to help a seller understand the importance of competitive pricing is to get an appraisal. This is an impartial, third-party analysis of the value of the home based on its current condition and place in the market. An appraisal can help support your theory that a price reduction may be in the best interest of the seller. With the information from the appraisal in hand, the seller can see how their asking price stacks up against the value of the home, and hopefully, begin to see that the gap between the two will ultimately result in more time on the market and fewer offers.
Show the Data
If the seller still isn’t interested in coming down on their price, it’s time to present them with the one thing they can’t argue with: data. Show them the market trends and comps in the area. Help them see what other similar homes in the area have sold for, and how many days they were on the market.
As you show them this data, explain the 10-day rule. Discuss with your sellers that if the home goes up for sale at this price and doesn’t generate interest and offers in 10 days, then the price is too high. If they agree, include the 10-day rule into your contract so you don’t have to try and convince them to reduce the cost after 10 days.
Another option is to create a buyer survey. This can be a quick survey sent out to your network of buyers asking for feedback on the property. If most of the responses come back stating that they love the property but it’s just too expensive, it can help sellers see that it’s not just you saying the price needs to come down, but the opinion of the majority of active buyers as well. This will probably give the seller information they don’t want to hear, but as their agent, it is your responsibility to lay out the facts so they can make confident and informed decisions.
Explain Personal Value Vs. Market Value
This won’t be an easy conversation to have, but it may be received better if you weave parts of it into your conversations. Explain that personal value is what the seller believes the property is worth based on their experience. To them, the personal value of the property is high because it is the perfect property for them. It may be hard to see why it’s not the perfect property for everyone else. The market value is what active buyers are willing to pay for the home. It is the concrete data and numbers that depict what buyers value in a home and the price they’re willing to pay.
Personal value is almost always higher than market value. When the seller can see the difference, it may be easier for them to separate the emotional tie they have to the property with the analytical data about the home’s value.
Be OK Walking Away
Sometimes, no matter what you say and do, sellers won’t budge on an overpriced property. They are willing to let it sit on the market for weeks and months, unmotivated to compromise to sell. In these cases, after you’ve had multiple conversations about your opinion, the data, and the market, sometimes the best thing you can do for them and you is to walk away.
It’s better to disappoint them in the beginning than go along with a price you know is too much, spend time and money on marketing, and still have no sale 3-6 months later. This is not good for your reputation, and not a good use of your time and talents. If you’ve presented all the options and they aren’t willing to compromise, it may be best to walk away.
Expert Negotiation Comes From Continued Education
The ability to communicate and negotiate with buyers and sellers is an important part of being a real estate agent. Top agents understand that investing in continued education is the secret to success, and are always looking for ways to learn more about the industries and develop new strategies. Mbition offers courses for new and seasoned agents, as well as exam prep, home inspection licensing classes, and home inspection certification training.