From Listed to SOLD - How to Sell Those Listings You Work So Hard to Get!

Related to a recent blog entitled "READ THIS Before Your Next Price Reduction Recommendation, today's post is about HOW to recommend a price reduction if it comes to that without blowing your credibility, or, frankly, ticking off your seller.

In a perfect world (and why not strive for that?), a price reduction is rarely necessary. In this perfect world, real estate agents price, prepare, and present their properties properly (I love alliteration) and therefore homes sell in a reasonable amount of time without the need for a price adjustment. Agents don't capitulate to the demands of sellers to overprice a home, nor do they "buy" listings with inflated estimates of market value, planning to push for a price reduction six weeks later.

Okay, so it's not a perfect world and L'il Miss Smarty-Pantz JAH didn't always score a 10 on the beam either when it came to pricing her listings for sale. Pricing is an art, not a science; the "right price" is a constantly moving target, and can be affected by many factors outside our control. So, it happens. Sometimes a price adjustment is the right thing to do.

So, what might be some ways to approach the price reduction conversation with your seller without jeopardizing your credibility (hey, YOU suggested or agreed to the price in the first place!) or otherwise creating unnecessary drama and angst between the two of you?

I have a few suggestions, but would like to hear yours!

1. Prepare the seller ahead of time that a price adjustment may be required if the market doesn't respond as favorably to the home as we hope it will. But do this carefully, not with a pre-printed price adjustment form or with a snotty attitude of "Well, we'll TRY it your way if you insist, but BE PREPARED to reduce the price," but rather as if you have just as much to lose as the seller does. In other words, "as if" you're on the seller's team... which you are, right!?

2. If you recommended (or agreed to) a price believing with all your heart that you were in the ballpark, but discover that, um, you weren't, take the blame. Admit that you were wrong and that you're very sorry you got the seller's hopes up. Perhaps something like:  "Bob and Sue, I blew it. I really thought your house was nice enough to overcome XXX, but I was wrong. I'm glad we gave it a try, but I do think we're going to have to reduce the price significantly. Let me tell you what I'm thinking..."

3. As pontificated about in the original blog, it's best NOT to lead with a price reduction as your primary solution, for several reasons. One of those reasons is that if you are able to suggest alternatives to a price adjustment and the seller rejects your suggestions (e.g. stage the home, replace the carpet, mow the lawn, etc.), then you can feel much better about recommending a price reduction because it's actually the seller making the choice to reduce instead of fix or improve.

4. Related to #1, when a seller wants to push the price beyond your comfort level and if he's not too far removed from reality, agree to try his price for a week to ten days, no more. Don't get snotty about it because the fact is, you don't have a crystal ball; maybe the market will respond more positively than you expect! Say something like this: "Okay, let's try it for a week or so. It's a bit higher than I'd like, but I don't want to give away your money if I'm wrong. If we aren't getting the activity we need or if the feedback indicates the price is high, we'll reduce it to $XXX,XXX, deal?"

So... there are some suggestions that worked for me... any you'd like to share with the class?

I have a friend who listed her house with one of the top agents in her area. They went on the market about two months ago, at the exact price the agent recommended and supported with his market analysis. Showings were brisk at first, then trickled off, as typically happens. Feedback has been generally positive, although the home is rather unique and simply not practical for many buyers, and the feedback has reflected that.

A few weeks ago, out of the blue, the agent recommended a $50,000 price reduction. This caught my seller friend by surprise since the feedback she'd received never mentioned that pricing was an issue; most of the negative feedback centered on the unique features of the home that made it "not work" for the buyer. But no one, to her knowledge, had mentioned price as an obstacle. My friend asked the agent for an explanation of his recommendation, but no explanation cometh, the agent simply reiterated his recommendation that she reduce her price.

My friend came to me for advice. I suggested she ask him the following questions as to the WHY of his recommendation:

1. Has there been consistent feedback that we are overpriced? (If so, it has not been shared with us.) 
2. How is the overall market right now? Is anything in our price range selling? Is the market typically slower this time of year?
3. If the market is not interested in our home at the current price, would your recommended price reduction change that? 
4. Will reducing the price by $50,000 overcome buyer's objections to the unique character of the home, or will buyers still expect a more traditional home?
5. Are homes in your recommended price range getting more activity than homes in our current range?

and the kicker...

6. Has the market changed significantly since you recommended the price we listed at? 

My friend is not categorically opposed to reducing her price if that's the right answer, or to withdraw the home from the market and wait for a better time to sell. But she wants (and deserves) information. A coherent explanation. Some evidence that her agent (who is supposed to be looking out for her best interests) put a little effort and thought into her situation -- and his recommendation.

Contrary to what we like to believe, our sellers are not stupid and they aren't unreasonably stubborn. But when we recommend a list price, back it up with data, and then, like clockwork, push for a reduction to that price six weeks later without explanation or exploration of other solutions, home-sellers have every right to be frustrated with us and to question our credibility. To doubt our commitment to their best interests. Or perhaps, to reach the conclusion that we're just lazy.

(My friend is thinking all these things about her agent and I can't blame her).

The moral of the story... before you recommend a price reduction, make sure you have answers to all the questions YOU would ask if it were YOUR home on the market and your agent advised you to give up a chunk of your equity. DO your homework, not just to pacify the seller, but also to determine if, indeed, a price reduction is the right solution. Maybe it is, maybe it's not. But be a PROFESSIONAL real estate agent and find out.

Oh, and it wouldn't hurt to price it right in the first place.

RELATED BLOGS
When Your Listing Isn't Selling, What's the First Thing to Fix - All together now...
STOP! Before You Reduce the Price!
If Price is All That Matters, What Do They Need Us For?

During a recent SWS Teleseminar show (Negotiate with Soul) a discussion arose as to whether or not a listing agent should "remind" the buyer agent of the buyer's contingency deadlines. We didn't exactly call it "reminding," but rather "checking in" or "following up," but to my ear, it's the same thing as "reminding."

For example, in Colorado, there is a loan approval deadline which somewhat functions as the Drop Dead date in a transaction. If the buyer does not have loan approval by that deadline (typically a few days to a week prior to closing), he can do one of three things. He can:

1. Terminate the contract and receive a refund of his earnest money, no questions asked, or

2. Ask for an extension of the loan approval deadline (which the seller has the option to grant or not), or

3. Do nothing.

Please note - the onus is on the BUYER to notify the other party if there is a problem with the loan. If the buyer does nothing, it is assumed that the loan is fine, and the earnest money goes "hard" - that is - if the transaction does not close on time, the seller has the option to keep the buyer's earnest money. But NOT HAVING LOAN APPROVAL DOES NOT TERMINATE THE CONTRACT and if it still somehow can close on time, great!

So, back to the question, (assuming an agency relationship exists) should a listing agent remind the buyer agent about the loan approval deadline?

You can probably tell by my tone what my opinion is... but first, what's yours?

Yesterday, we did a teleseminar show in the SWS Virtual Studio about negotiating - specifically, negotiating on behalf of our buyers and sellers (as opposed to any sort of fee or commission negotiation). I was joined in the studio by Blake Farley, from Silver City, New Mexico and from the positive feedback I received on her presentation and brilliance, I'm guessing you'll be seeing her on future shows - GREAT JOB, Blake!

The format of the show was that Blake and I took turns sharing our top ten favorite tips and strategies for keeping negotiations on track and civil... and, oh yeah, maximizing the likelihood that our client gets what he wants without any unnecessary drama, chaos or angst. At the end of the show, I asked the audience to tell me what their favorite tip(s) of the day was/were, and here were the results:

Favorit-est Tip #1: When negotiations get hot and heavy, withdraw. Dead silence from your side. Don't tell the other agent you're "thinking about it" or going to "sleep on it," just stop all communication until the next day. Very unsettling to the other side, and keeps your client from getting carried away by the emotion of the negotiation.

Favorite-est Tip #2: Never believe anyone when they say "This is our best offer" or "This is our bottom line," and related, never let the deal die on your side. No one knows what their best offer or bottom line is until they've either signed an agreement, or rejected one. When the other agent presents a counter-offer to you and tells you "this is the best we can do," pay no attention. If your client still wants the house (or still wants to sell), counter back. More often than not, the negotiation will continue beyond the previously stated "best" or "bottom."

Favorit-est Tip #3: Related to 2, never ask your buyer or seller for their bottom line or highest-and-best. If you do, you force them to commit to a figure and they might be uncomfortable down the road if they're willing to go higher or lower. A side benefit to this strategy is that you won't be accused of spilling the beans to the other side if, by chance, the offer or counter comes in at the exact figure they shared with you. If a buyer or seller tells you what their highest-and-best or bottom line is, act as if you didn't hear them ;-]

Favorit-est Tip #4: Get everything in writing - no oral negotiating. When agreements are reached over the phone, something always comes up when it's time to put the agreement on paper, creating unnecessary drama. It's easy enough today to just "write it up," and keeps everyone on the same page, so to speak.

(Tied for) Favorit-est Tips #5, 6 & 7: (Almost) always counter an offer, even on technicalities to keep the buyer from feeling he could have/should have offered less; as the listing agent, don't remind the buyer's agent of contingency deadlines (to protect your seller's right to retain earnest money); and always remember whom you represent, which helps you be a stronger negotiator and not make an idiot out of yourself with your own client!

Other tips from the show:

• Make the offer price/counter price "attractive" to the other side by rounding up or down (e.g. $279,900 versus $280,000)
• When countering, use positive statements when possible - e.g. instead of "No termite inspection," say "Buyer to pay for termite inspection."
• Realize that you can say NO - and that the other side sometimes fully expects you to.
• Set expectations with your clients BEFORE you get to the offer stage (e.g. market conditions, communication, etc.)
• Negotiate delayed possession for staged and owner-occupied properties, in case the loan falls apart at the last minute
• Try to give the other side an opportunity to save face when negotiating - don't reject a counterproposal outright - give a little bit, even a token amount or concession.

If you missed the show, you can purchase a recording of it in the SWS Bookstore for $3.99, or join Club SWS for $10/month and get access to recordings of all past, present and future SWS shows!

A few months ago, I was contacted by one of my customers who had just purchased my Listing Analyzer for Expired Listings which is a dandy little tool to help agents figure out why an expired listing didn't sell with the previous agent... and what they can (and should) do better this go-around.

She was a little miffled by something she saw in there - specifically - my implication that the previous listing agent "failed" to sell the house and that somehow, that was HIS/HER fault!

She asked me: "So, Jennifer, you're saying that if I can't sell a listing, it's MY fault?"

Yes. That's exactly what I'm saying.

Are you a bit miffled with me now, too? ;-]

Here's the thing.

When a seller wannabe honors us with his business, we agree to take on a serious responsibility. Our job as a listing agent, when done right anyway, entails far more than just getting some signatures on an agreement, putting a sign in the yard, entering some words into the MLS and installing a lockbox. More than just holding open houses, creating pretty brochures, taking good pictures and pursuing buyer feedback. More, even, than just pricing properly!

It's our job to know:

1) if the property is sellable at all (not all are), and,

2) what it will take to sell it and,

3) how to effectively communicate with the seller wannabe so that he understands and accepts how his actions and decisions affect the final outcome, and how to inspire him to do his part.

So, Ms. Smarty Pantz, are you saying YOU sold all YOUR listings because you're so freakin' perfect?

Nope. I didn't sell all my listings and I'm far from perfect. But when my listings didn't sell, I'll be the first to say it was MY FAULT.

Agree? Disagree? Unsure? Tell me!

A few weeks ago I posted a blog about whether it's a good idea or not to "disclose" an obvious material defect in your public advertising of a home, or let buyers discover it on their own when they visit the house. My opinion is that it's usually best to be upfront about such things so that you are marketing to the "right" buyer, not just using a shotgun approach hoping that "right" buyer stumbles along.

Well, there's more to the story; thought I'd share.

After the blog got featured, a member wrote to me privately telling me that she was currently in that situation with a new listing. The home is cute, in a great location, great square footage and tremendous potential. BUT (sigh - always a "but"), it has a material defect that will likely scare the pants off the majority of retail buyers. The defect is fixable, but at significant cost.

My reader had debated whether or not to disclose the defect in the public comments of her MLS listing. She (and her seller) had already priced the home properly (significantly below the non-defective comps), and she knew the price would be attractive to the market.

But... to mention the defect? Or not...?

After talking with her managing broker, my reader decided to be silent on the defect in the public marketing (with a brief mention of it in the broker comments), with the goal of generating as much activity as possible from a wide spectrum of buyers. Her seller agreed with this approach and away they went.

Well, the strategy worked, sort of. They had a bunch of showings the first week - woo hoo!

But...no offers and universally negative feedback. "My buyers loved the house until they got to the basement...then... yikes!"

At the end of seven days, her sellers asked her to change the marketing to more accurately reflect the reality of the situation. They admitted they were tired of all the showings, knowing that most of the buyers wouldn't consider the home at any price, and the negative feedback was wearing them out emotionally. (The agent admitted to similar feelings - that she was starting to dread notices of showings and subsequent agent feedback).

So, the agent changed the marketing as requested and immediately was rewarded with two showings, presumably by buyers who were willing to consider dealing with the defect. The agent told me that her enthusiasm level improved dramatically once she felt she was advertising the home more accurately, and felt she'd learned a valuable lesson in marketing - "UNDERpromise and OVERdeliver!"

Which raises the question - while OVERpromising in marketing might get more buyers/customers in the door, if they don't buy because they felt misled, was the marketing effective? (I vote NO).

But was the agent wrong in trying it "her" way at first? Did she dis-serve her sellers with her initial "more-inclusive" marketing?

I don't think so, but I'd love your thoughts on the matter! I'll share mine if you'll share yours.  

EPILOGUE: Two weeks and six more showings later, the house went under contract and is scheduled to close this week.

Many years ago, I had a sweeeet little listing in Denver. A 1940's stucco Tudor, with all the fixtures and features Tudor-philes love - glass doorknobs, art-deco light fixtures, oak floors with inlays, decorative tile window sills, vintage fireplace... it was an easy house to fall in love with.

And buyers did... over and over again. Fell in love, that is... UNTIL...

<key spooky music>

...they reached the back bedroom. Unfortunately, the entire northwest corner of this sweeeeet little stucco Tudor was sinking. Not only did the floor slope alarmingly, there were 1"-2" cracks all along the back wall and across the ceiling.

Ouch.

How fast do think buyers ran screaming for the door?

(pretty fast)

Other than the minor issue of a quarter of the house falling off, the home was truly wonderful. It sat on an oversize lot, had a finished basement, an updated kitchen and 2 full baths. The price was great (since we knew we had an objection to overcome), it was staged and photographed beautifully.

BUT WE DIDN'T DISCLOSE THE STRUCTURAL DEFECT IN THE LISTING DESCRIPTION, hoping that buyers would fall so in love with the home, they'd be willing to overlook it.

Silly, silly Jennifer.

The house didn't sell. And didn't sell. And didn't sell some more, even though we had scads of showings.

It finally occurred to me that we were attracting the wrong buyer - the adorableness of the house was bringing in the Pottery Barn crowd by the dozens, but ... the Pottery Barn crowd ain't much interested in a house with a serious structural issue.

So, I could finish this story, but I'd rather hear your thoughts on the matter. Do you "disclose*" an obvious defect (e.g. high-tension power lines overhead, a highway behind the back fence, water in the basement, a strong offensive odor, structural damage, etc.) in your marketing, or let buyers discover for themselves it when they look at the house?

Please share your thoughts and experiences!

* by "disclose" I'm not referring to our and our sellers' legal obligation to disclose known defects; I'm asking if you mention the defect in your MLS description and other marketing.

Ahhhh... back from vacation... and I must confess it's awfully darn cool to GO to the beach and then come HOME to the beach!

Anyway, here's a follow-up to my last pre-vacation blog about the show Loreena Yeo and I did together in the SWS Virtual Studio about getting listings sold FAST.

One of more memorable messages conveyed during that show was Loreena's utter and complete commitment to walking away from a listing that doesn't meet her requirements. If the seller refuses to price properly and/or to follow her advice on preparation and staging, she does not want the listing. Period.

Many listeners commented to me afterwards how refreshing it was to hear a real estate agent so secure in her value and confident in her abilities - that you couldn't help but FEEL the control Loreena takes of her business and her clientele, and be a bit awed by it.

Perhaps that's a bit melodramatic, but only a little bit. Seriously, it was impressive.

Well, so maybe everyone wasn't so impressed. A few listeners contacted me afterwards chiding us for making it sound "so easy to walk away." That we were being unreasonable and irresponsible to advise agents who are not yet "there" to turn down business. That it's fine for us fat & happy established agents to be selective about which clients we accept and which we don't, but for the average new-ish agent, being selective is simply not an option. After all, new agents NEED the practice; they NEED the experience, and perhaps most of all, they NEED those For Sale signs to generate calls from buyers.

Whoa, let's back up here a minute.

QUESTION: Under what circumstances does Loreena respectfully walk away from a listing? Hmmmmm?

ANSWER: She walks away because the seller refuses to do what Loreena knows needs to be done to experience a successful home sale.

Loreena knows what it will take to sell a home in her Frisco market. And presumably, that's what the seller wants and therefore, it's what Loreena wants to deliver. If the seller is going to stand in the way of that goal, Loreena feels duty-bound - both to herself and to the seller - NOT to acquiesce and allow the seller to fail.

That's her job. And she takes it seriously.

To allow a seller to call the shots - to "drive your bus" as Loreena calls it - is to neglect your fiduciary duty to your seller. Your personal needs for experience, practice and sign calls are not remotely relevant to your responsibility as a licensed real estate professional who is being considered for the honor of listing a home.

I have a friend with high blood pressure. When his doctor discovered it, he prescribed a blood-pressure-lowering drug. My friend balked, saying he didn't want to be on a prescription medication the rest of his life. The physician calmly replied "Well, then, that's your right, but I have to tell you that if you refuse treatment, I will no longer accept you as my patient. I feel that strongly that you take this drug for the sake of your health."

And guess what? My friend takes his medicine and is grateful his doctor respectfully insisted. We owe our sellers (and ourselves) the same respect, don't we?

The other night, Loreena Yeo and I did a show at the SWS Virtual Studio on the topic of getting listings SOLD quickly. And yes, assuming there is a buyer in existence for a property, it is entirely possible to sell a house in a matter of weeks, not months. In fact, that should be every listing agent's goal - that their listings sell to the first "real" buyer who comes along... or maybe the second or third on an off-day ;-]

The basic premise of our show was that if you know how to price and prepare a home for market, and if houses are selling in that market, a listing can and should sell quickly. Assuming the seller agrees to your pricing and preparation recommendations, of course (which I'll write about soon).

During the show, we got a little flack for this message from listeners who wanted to know how Loreena MARKETS her listings to ensure that quick sale. Sort of a "yeah, yeah, yeah, we know pricing and staging are important, but what about the MARKETING?"

Loreena responded with "I don't do anything special. I just sit back and wait for offers."

That apparently didn't sit well with some listeners. They didn't seem to want to believe that marketing isn't the deciding factor in the success or failure of an attempted home sale. But I agree with Loreena 100% - as I've said many times, Houses Aren't Pet Rocks - no amount of marketing will inspire a buyer to buy a home he doesn't want, if there are better houses on every other corner.

Whether or not a listing is going to sell is determined before the sign goes in the yard. Once that sign is in the yard and the "product" hits the market, our systems take over and the market will determine whether or not it approves... and no amount of marketing will change how the market feels about it.

In case I wasn't clear, I believe that we real estate gods and goddesses earn our money in the pre-listing phase (and then later in the contract-to-closing phase), but not really all that much during the actual "marketing" phase.

But to accept and embrace this philosophy will require a massive paradigm shift in our industry. After all, we're SALESPEOPLE! We SELL houses! So, obviously, it must be our MARKETING that is the most important factor in the sale, right?! And besides, our sellers aren't WILLING to do all that work ahead of time ("I asked and they said no way, Ho-Zay"), so the best we can do is price it right and market the heck out of it!

Well, um... I'll just say this. That attitude is pretty much the norm in our industry, and maybe it's just me, but I seem to have noticed a little stagnancy in the real estate market lately, like, for the last several years? That houses aren't exactly screaming off the shelves? You think that maybe, just maybe, the "norm" is WRONG?

And maybe, just maybe... there's a better way?

A few weeks ago, I started writing about the Go-Giver real estate agent - how we in our industry can apply Go-Giver principles to our business. To read earlier posts, see the links at the bottom of this blog!

Here's a quote from the introduction to "Go-Givers Sell More" by Bob Burg and John David Mann:

"It's not about you, it's about them."

Mr. Burg and Mr. Mann explain that success in sales is not due to "mastering the close" or having a "dazzling presentation" or the ability to "shoot holes in any customer objection from fifty paces." It's about being a real person - a person who "enriches, enhances and adds value to people's lives." As the Go-Giver fictional Realtor(R) Debra Davenport says "You want people skills? Then be a person."

Okay, so this is where today's blog begins...

"Listing Presentations, How to Lose them from Hello!"

Yes, I watched Jerry McGuire recently.

Real estate agents always want to know how to do a better job at their listing presentations, especially if they've lost out on a listing or two recently. They wonder if perhaps their presentation materials need to be fancy-schmantzy-ed up, or if they need to do a better job explaining why they're better than their competition.

After all, isn't that what sellers want to know? How totally awesome WE are? And, the better we are at telling them how awesome WE are, the more likely they'll be to believe us?

Um.

No.

As counter-intuitive as that may sound, a seller prospect probably doesn't care much about how awesome we are. He may not even care if we're better than the competition, at least, not at first.

What's that old saying? "No one cares how much you know until they know how much you care?"

That applies perfectly here. When you waltz into a seller wannabe's home, say "hello" and then whip out your Power Point presentation, three-ring binder and put on your presentation face, you're sending a pretty clear message that you don't care much about your audience. It's all about YOU.

No, it's not, Jennifer! I'm there to help the seller! My fancy Power Point presentation and three-ring binder are all about the seller and his needs!!

Um.

No. Nice try, but... No.

Think about it. Your "audience" (the seller wannabe) has a Problem. He is considering hiring you to Solve that Problem. But if you don't have a clear understanding of his Problem, you can't possibly address his Problem. And you can't have a clear understanding of his Problem unless you take the time to learn about it. And you can't take the time to learn about it if you're doing all the talking!

Besides, no one believes you when you tell them how great you are, anyway.

Wanna stand out from your competition? Let them go in with their fancy-schmantzy Power Points, three-ring binders and presentation faces (and subsequently bore the audience to death).

YOU go in with a sincere desire to help. Your competition won't stand a chance.

RELATED GO-GIVER BLOGS
Prospecting - If It Feels Wrong, Don't do it!
Mr. FSBO - You're An Idiot and I'm Not!
Have You Read the Go-Giver? You oughta!