Ken's Naperville Real Estate Blog : THE PRICE REDUCTION. A HOME SELLER'S BEST FRIEND...

THE PRICE REDUCTION. A HOME SELLER'S BEST FRIEND...

"If we lower our price, will we look desperate?" asked my client.

"No.  You will look like you want to sell your home..."

Keller Williams

Explaining pricing is a fundamental part of a Realtor's job.  

When first sitting with a potential seller, I show them the comparable homes:

  1. That are on the market.
  2. That have recently closed.
  3. That have come off of the market without selling.

With the data before us, the client usually has a good idea of the reality of the situation...

And they still want to price it too high... 

Fine.  I find arguing with clients in poor taste as well as bad for business...

This is why I make price reductions a standard part of my "listing presentation"... 

Why?

Because I believe they are a seller's best friend...

A few reasons:

  • Price reductions cause activity on the local Multiple Listing System(MLS):  New email alerts will be sent to buyers searching for a certain type of home.
  • "Buyers" that have already seen the home may be sitting on the fence.  The price reduction acts as a fisherman twitching a lure.  It can cause the fence sitting buyer to "strike" with an offer...
                                                          Fisherman Fishing with a Fishing Pole clipart

 

  • My listings should have a contract within 90 days or 10-15 showings.  If they do not, they are overpriced.  Price reductions will eventually cause a home to be priced properly.

So don't fear the price reduction...

It might just be the key to selling your home.

Ken 

 

Comment balloon 24 commentsKen Tracy • December 07 2009 04:41PM

Comments

Common sense Ken that a lot of people just don't want to understand.  The more they hear it the better, because what you're saying is truth!

Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) over 9 years ago

When clients want to price high I will not take the listing without autmatic price reductions built into the contract. After 30 days we chop it, after 60 days we chop it again. If they don't agree to that they can find an agent that wants to take a soon to be expired listing then call me back.

Posted by Kyle Shorts, Aggressive Internet Marketing! (Russell Real Estate Services) over 9 years ago

Ken, I agree.  Price strategy starts with the initial price but must include a "what happens later" component.  New inventory, lack of activity, loads of activity with no offers all should be discussed so a buyer knows you have a good overall perspective on the market and a plan to accomplish their number one goal, getting theirs sold.

Posted by Dan Tabit (Keller Williams Bellevue) over 9 years ago

Hi Dan, Kyle, and Larry.  Thanks so much for stopping in.

If it was my home and I wanted to sell?  I would drop a little every two weeks until we had it sold...

Thanks again guys!

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

Ken, hopefully the sellers see the light at the beginning of the whole thing. I like to price it right from the start. If not yes, reduce. I just don't like wasting the time with clients who are not open to the idea up front.

Posted by Frank Rubi, FrankRubiRealEstate.com (Frank Rubi Real Estate, LLC) over 9 years ago

Great common sense suggestions about dealing with this major source of friction between sellers and listing agents. Your philosophy ought to lead to a lot less grief and more nuanced understanding of the pricing strategy.

Posted by Dave Roberts (Healdsburg Sotheby's International Realty) over 9 years ago

Hi Dave and Frank.  Thanks so much for stopping by.

Yes, it is better to price right from the start.

But I understand how a seller feels too...

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

I hate to wait 90 days because then the home is starting to get stale.  Maybe in the first 45 days if it is really slow.

Posted by John Walters, Licensed in Louisiana (Frank Rubi Real Estate) over 9 years ago

Ken...

This was very nicely stated.

Featured in the Group "Whacked!!!"

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 9 years ago

Ken,  this is very important so that listings don't go stale.  I don't think some sellers understand that, but if explained at listing time in an effective manner, that makes things smoother usually.

Posted by Heather Fitzgerald, REALTOR Greenwood Indiana Real Estate (REALTY WORLD-Harbert Company, Inc.) over 9 years ago

Hi Ken... I often negotiate price reductions at the time I take a listing.  This way it avoids the debate about them as the home's DOM counter gets higher and clients get more anxious about the lack of an offer.

Posted by Steve Shatsky over 9 years ago

Hi Steve, Heather, Richard, and John.  Thanks so much for stopping in.

Thanks for the Feature, Richard!

It seems funny.  Most sellers prefer to sit than be proactive.  That's why I bring the "listing modifcation" with me on my appointments.

As I said in a previous comment, I would use them aggressively...

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

While what you are saying Ken makes perfect sense I strive to not be wrong the 1st time. I want the value given to a seller to be right on the money. As long as the market is not in a state of a rapid increase or decrease the chances should be pretty good you can achieve this goal.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 9 years ago

Hi Bill.  Thanks for stopping in.

I do to.

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

Thanks for the post.  I agree!!

Posted by Nicole Orringer (HomeTowne Realty) over 9 years ago

Hi Nicole.  Thanks for stopping in.

My wife's name is Nicole!

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

Ken. talking about a price reduction when doing a listing presentation is wise and prepares your seller for reality

Ty

Posted by Ty Lacroix (Envelope Real Estate Brokerage Inc) over 9 years ago

Hi Ty.  I just think it is important that they understand...

Thanks for stopping by,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

Good stuff Ken. I especially like "I find arguing with clients in poor taste as well as bad for business...", very true.

 

Posted by Roy Paeth, Just a regular guy helping real people! (Keller Williams Inspire) over 9 years ago

Ken....great info...I do the exact same thing on reductions......you have to. The worst thing in the world is to see a listing thats been on the market 123 days and no price change....it shows me that the seeler is very hard to deal with. Have a great day!

Posted by Rob Thomas, Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro (Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954) over 9 years ago

Hi Roy and Rob.  Thanks for stopping by.

I am glad you enjoyed this post.  I need to write another one!!!

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

these days they just don't understand the market is sooo different from three years ago.  So I too have a priced reduction signed along with the listing agreement.

I have two stale listings right now. hahahaha

Posted by Angelia Garcia (Pure Realtors) over 9 years ago

I think I am going to work price reductions into my listing presentation so they see it as an upfront decision rather than something that comes along later.

Posted by Christa Ross, Helping you buy and sell Pittsburgh's Best Homes (RE/MAX Select Realty - REALTOR and Green Homes Specialist) over 9 years ago

Hi Christa and Angelia.  Thanks for stopping in.

Stale listings.  Yuck!:)

Prepping them while listing is a great idea...

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

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