Selling Soulfully with Jennifer Allan

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.

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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?

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?

On Wednesday evening, Loreena Yeo joined me in the SWS Studio to talk with me (and a few hundred of y'all*) about "Pricing it Right - Helping Your Seller See the Light!" Well, I graciously let Loreena go first, thinking I'd get *my* turn soon, but it wasn't to be. Not that Loreena was a microphone-hog or anything - not at all, but the audience clearly wanted to hear more from her than the time I'd allotted was going to allow.

So, being the primary decision-maker here in the SWS Studio, I made the executive decision to save my thoughts for a later day and let Loreena continue to wow the crowd for the entire 75 minute show.

(I just scheduled the follow-up show for August 7th. If you'd like to join us, go here to register: www.SellwithSoul.com/proper-pricing.)

As the title implies, the topic of the seminar was how to persuade a reluctant seller to price his or her home properly so that it will sell. Sure, KNOWING what that right price is is important, but being able to communicate it effectively might be even more so.

Loreena shared some great strategies and while I won't describe all of them here, here are some of my favorites.

1. Come in armed with your stats
Loreena's listings enjoy a way-below-average DOM, a higher-than-average list-to-sold price ratio and an extremely low fall-out rate (listings that don't sell). In her early conversations with a seller prospect, she shares her statistics with him or her, which accomplishes several things. First, it clearly demonstrates that whatever she's doing is working, which inspires sellers to want to know more. Second, it lends credibility to her CMA and pricing recommendation and third, it helps her turn down overpriced listings because she can respectfully say that her record is important to her and she's not willing to risk it taking a listing she knows she can't sell.

Of course, using this strategy requires that you have a good track record! (And we're going to talk about that at the next SWS Teleseminar, How to Be the Best Thing to Ever Happen to Your Seller. Details here: www.sellwithsoul.com/best-thing.)

2. Spend quality (and quantity) time preparing your CMA
Being oh-so-efficient is way over-rated. Loreena spends several hours poring over her CMA reports so that she is intimately familiar with exactly what those facts and figures are telling her. When she is in front of a seller, she knows her stuff and it's obvious to the seller that she knows her stuff. This gives her tremendous personal power when talking about price.

Conversely, if you wing it, a seller can easily fluster you with his protests that: "The house down the street sold for way more than THAT!" or "The other agent we talked to gave us a much higher price than THAT!"

3. Don't try to be "listing specialist"
I've been singing this song for years. If you work with buyers, you'll be a far better listing agent. After all, who buys listings? Buyers, right?! If you don't hang out with them (buyers) on a regular basis, how will you know how they think, what they want and how much value they place on certain amenities over others?

4. And my favorite from the evening... After you've presented your data, sit back and smile sweetly
Loreena described how she comes armed with lots of paper - charts, graphs, lists, reports, summaries, etc... which she spreads out on the table for the seller to review. Once she's delivered her analysis of all this paper, she sits back and smiles sweetly, and lets the seller take it from there. Numbers don't lie and she just presented a lot of non-lying numbers. With her body language, she subtly forces the seller to acknowledge them.

Oh, there was so much more, but I'm outta time for today ... THANKS Loreena for sharing your wisdom. Can't wait to do it again!

* As you may know, Loreena is Chinese and English is not her first language. She speaks English exceptionally well, but she does have a charming accent. Anyway, during the show she used the word "y'all" in her cute Chinese accent which cracked me up (good thing I had my phone on mute). Must be the Texas influence...