Pricing In a Shifting Market, Don’t Sell Your Sellers Short
Take it from Ty Voyles, Co-founder and CEO at Fulcrum Properties Group in Washington, D.C.: “The most important thing in real estate is to get the highest and best price, in the shortest amount of time, with the least amount of hassle.” Knowing sellers’ priorities gives you a leg up, but when the market is shifting, you need to pack your toolbox with different tools to get top dollar for your clients.
“Pricing is about positioning in the market,” Voyles says. “It’s not about what you think the home is worth, what your client wants to sell the home for, or what anyone else says. It’s about what the market shows at a specific point in time and what a ready, willing, and able buyer will pay and what a motivated seller will accept.”
To price in a shifting market, Voyles advocates a three-pronged approach:
- Research and interpret market data.
- Communicate value to sellers.
- Evaluate and plan a pricing strategy.
Know Your Numbers
“Numbers are the language of business, and we are running businesses, not selling houses,” Voyles says.
In other words, powerful pricing comes down to knowing your numbers. Sellers rely on your expertise and your resources, so take it upon yourself to stay educated on current market data. If you want to be seen as an expert on your local market, this means knowing metrics like average days on market, total active listings, total pending listings, total closed listings, and total expired listings. You should be checking these numbers daily. Your local MLS can serve as a great resource for broader data sets, while Command can really help you dig into hyperlocal data through Neighborhood Snaps.
“The numbers tell a story – sometimes multiple stories,” Voyles says. “Use your fiduciary skills to understand the numbers and tell the story that best helps your client achieve their goals; this is especially important in times of uncertainty.”
Show Your Value
You can diligently complete all your research, but if you don’t know the proper way to pass that knowledge onto your sellers, your transaction won’t end in a win-win.
First, ground any transaction in truth. Don’t soften the blow of a soft market just to get a listing. Instead, reinforce the idea that you don’t make the market but are experienced in interpreting it.
“We are all economists in real estate,” Voyles says. “Be the economist of choice, and be able to tell that story.”
As a KW agent, Command can handle much of this work on your behalf through a variety of story-driven applets. Neighborhood Snaps generates easily digestible and shareable hyperlocal neighborhood market insights, while Listing Presentations in Designs populates your listing presentation with neighborhood-specific data.
As important as it is to be armed with the story you want to tell, you also have to be prepared to listen. Watch and listen for signs of reluctance, such as closed body language and one-word answers. Ask questions and listen attentively to answers to clear up concerns, and you’ll build a rapport with the client.
Plan Your Strategy
When evaluating and planning your pricing strategy, avoid chasing the market. Price behind the market, and a property won’t sell. Price at the current market, and you’ll likely overprice. Pricing ahead of the market actually means pricing below market, which can help get a property sold more quickly.
Help your seller buy into your pricing strategy by sharing how supply and demand affect the market as well as the buyer thought process, including the fact that the buyer now has more access to more information about more listings than ever before. In order to relay the best information to your seller, make sure to familiarize yourself with these market changes. Gary Keller’s SHIFT is one resource you can use to help your sellers understand the intricacies of a shifting market.
“Many buyers feel that the longer they wait, the more chance they have to find a deal,” Voyles says. “As a seller, this means you really have one good shot at making a great impression – when you list. The first step into the market is crucial; otherwise, you are relying on price reductions and marketing gimmicks to grab the buyers’ attention.”
Finally, go into your presentation having practiced how to handle price objections like a pro. Role-play objections with other agents, and learn new scripts that address the needs of a shifting market. To keep sellers involved in the process, limit yourself to no more than three sentences before asking a question.
In Voyles’ experience, there are three common seller objections. Here are some ways in which you can navigate those conversations:
Objection 1: I’d rather try a higher price now and adjust later.
Script: Sure, we could do that, and it might work. But what if I presented you with two options:
(a) a very slim chance to get that high sales price, a very likely long time on the market, and the stress of having to keep your home in magazine-ready condition all the time, or
(b) a really good chance of getting maximum fair market value for your home, doing it in as little time as possible, and minimizing the stress that comes with selling your home … which would you prefer?
Objection 2: Our house is unique and worth more than the other homes.
Script: Yes, I completely agree that every home is unique and that’s why we adjust for the nuances of every property in our pricing analysis. The challenge we face is that most sellers want to price their personal preferences and sentimental value into a home. The challenge with that is that buyers haven’t made those memories yet and filter their decisions through their pocketbooks. We need to be positioned where your home is most appealing to the greatest pool of buyers, and that’s pricing ahead of the market. Don’t you agree?
Objection 3: We want to wait until the summer (or fall) to list, because prices will be better then.
Script: If you have a real need to wait – say you’re not moving for six months – that’s one thing. But the thing with waiting is that future markets are more uncertain. The other thing to consider is that markets shift quickly. Appreciation happens gradually, but downshifts happen suddenly, and many times, unexpectedly. Listing now and pricing right is the safest bet to get the results you’ve told me you want.
By leveraging KW technology and tools and implementing these three strategies, you’ll find yourself pricing ahead of the market and earning your clients’ trust.
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