Every homeowner wants to get the most money for their home when they list. They’ve paid for the mortgage for years and probably have most of their savings tied up in their property. The sale of their house can have a direct impact on the quality of life they will have in the future.
However, real estate can be very volatile. A short while ago, our market heavily favored sellers. They could put up whatever outrageous price they wanted and still expect cash buyers to come flocking in with offers that were way above the asking price.
Now, that’s no longer happening. Interest rates have reached around 7%, and this has affected affordability. As a result, buyers have become more selective—they want every dollar they spend on the property to count. If your seller sets the price too high, there’s a big risk of their house sitting on the market for too long. As their agent, how can you convince them to lower the price? Here are three things you can do when talking about price reductions with your clients:
1. Manage their expectations. Discussions about price reductions should be held right from the start to set your client’s expectations. Make sure to explain that the price you’ve come up with is based on the current market data and is what makes sense at the moment. One way to find out if the market sees value in the price is by evaluating the number of showings and offers. Assure them that you will give them weekly updates on the numbers. If you are getting too few or none at all, that means you’ll need to adjust the price.
2. Maintain constant communication. Since you’ve already prepared them for what may happen, the blow of a price reduction will be easier to handle. Present to your seller the facts about the market that will back up your claim. After that, show them their options. Emphasize how a price adjustment can dramatically improve the offers you can get on the property, and highlight the risks that come with sticking to the same price. However, keep in mind that your seller should still feel in control of their choices despite your pushing for a price adjustment.
3. Set up a weekly market update for the area. Many agents don’t think about this. If your sellers are getting a market update on the homes in their area that are going under contract, it’s going to be a lot easier ask for that price reduction. In the end, the decision on how much of a price reduction should be made will depend on the seller, but as their agent, you’re the expert your client will rely on for guidance. You have to offer your market expertise and share the latest data on comparable sales in your area. How you educate your seller will be crucial when determining the price adjustment.
Price reductions can be a tricky subject; agents have to broach this conversation strategically. By following these three tips, your seller will be more agreeable when asked to lower the price and will feel more involved in the process, thereby easing some of the burden on you. If you need more help on how to talk to your clients about price reductions, call or email me. I’d love to connect with you.
