Selling Soulfully with Jennifer Allan

Jennifer, 

Any home can sell in 30 days or less.

Price is always the issue.

It is impossible to under price Real Estate, if the home is being well marketed, the Real Estate market will not let you under price the house, the buyers will step in and bid up the price to where the value really is.  Not saying price a house at $1 but you get my point.

 

James Boyer

Some will and some won't....  There are thick headed sellers out there that feel a sucker is born every minute.  Most often they go the FSBO route because they don't like what the pros are telling them.

I agree 100% that taking a 30 day approach is the way to go.  Unfortunately, in this market, things can change in that 30 day period, and a price reduction becomes neccessary.  Never say never!  With fewer buyers out there, gauging the market sometimes takes in excess of the initial hope of 30 days- the sellers need to price it appropriately out of the gate, and then...have patience, as do we.  Thanks for the post- great points presented!

I've used automatic price reductions... the seller still wants the discussion about it.  I have found that I set them up on automatic emails just like a buyer, but with houses in their area, just like theres... so when they see other houses come on that are the same or better for lower prices... this helps the conversation.

I don't just do a CMA now... I run reports each week from my MLS about how many homes come on the market, go into contract, close and expire, plus DOM... I graph it for them and these facts make the conversation easy. 

Remember the key is, its never you that wants to lower the price... its the market rejecting their current price.  In a sliding market, pricing is the most important, working with the market is better.

Thanks for your post.

Most of the time the seller thinks he can get more for his home than the current value. This is the exception rather than the rule. I agree with you that if a house is priced right you can sell it in 30 days or less.

I have always believed the price was more important than any top producer agent

The question is what is the right price?  I've had seller's argue with me and convince me to put the property on the market at a higher price that I would have thought and then gotten it!  I just did a CMA for a house that I own that is currently on the market at $155,000.  The comps say $160,000 all day long, but here I sit!

A similar house did sell right around the corner from me.  They are on a cul de sac whereas I'm on the drive (more traffic on my street), but otherwise a similar home (they actually only had a car port, where I have a garage - big difference here in the midwest).  They got $167,000!  If I was using that as a comp for my home, I'd adjust as much as $10,000 for the cul de sac, which would bring mine to $157,000.  But then you would have to adjust for my having a garage...even if you only gave me a couple of grand, that would put me at $159,000.  yet here I sit!

As far as not being able to under price a home, I disagree.  There are no guarantees that you'll get a bidding war going.  This market is strange, but I do think that it will pass.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

James - I agree 100% about the potential for "underpricing". It's no guarantee, but what is in this biz?

Dan - I think there are also a lot of thick-headed agents who refuse to acknowledge the seller's intelligence. If we stop beating up our clients with our agenda, an awful lot of them might do the right thing an awfully lot more often! But yeah... there is no simple answer that covers every situation.

Laurie - Very true! But when a potential seller asks me "how long will it take to sell my house?" I'm always perplexed. I have NEVER understood the concept of pricing tiers tied to DOM. "So, Mr. REeeeltor, you're telling me that if I price my home $10k higher, I'll get my price if I'm willing to wait 180 days? " Uh, no...

Dan - great points. And, as long as you're staying in touch with sellers and providing hard data, you're doing the best you can. The final decision is theirs.

Michael - I know, I know!!! But the best part is that WE do the exact same thing when selling our own properties! I've overpriced every single house I've ever sold (of my own).

John - YES! But, then again, it takes a special agent to get to the right price!

Bob - I know, that's happened to me too. But SO rarely that I think it's worth the risk to stick to your gut. Every time I've "underpriced" a home, we did experience a bidding war. And I'm always perplexed at the outlyer comps that screw up your CMA.... Anyone have an answer for us?

 

I love your approach, Jennifer.  I'm learning that the correct pricing strategy (to sell in 30 days) is critical to building a successful practice.  Also, be willing to walk away from the deal.

Thanks for this important reminder.  I hate doing price reductions as well.

Jennifer 

I disagree that the automatic price reduction is unprofessional, it's a negotiation. They aren't listing at your recommended price and when the time comes to reduce the price they sometimes forget the original conversation.

Todd - Thanks! I like my approach too. The cool thing about your business (as a big bad discounter) is that if you don't want a listing due to pricing issues, it's pretty easy to walk away. When I owned my discount company, I rarely took overpriced listings because I didn't have the margin in my fee. Either I was able to get the seller to see the light OR I walked away. Since my commission upon sale wasn't going to change my life (at 1.4%), I wasn't as emotionally attached, I guess.

 Christina - Price reductions - ugh - I guess they just make me feel like one of those stereotypical agents who just wants their sign in a yard and figures they'll deal with the overpricing later...

Terry - I hear what you're saying. But I guess my whole point is that I don't wanna negotiate with my client. I can certainly see why it's beneficial to have an automatic price reduction (yes, to REMIND the seller of your earlier conversation), I just think that there are better ways to accomplish the same end goal. Thanks for your comment - it made me evaluate my position for a few minutes. Always a good thing.

 

Hi Jennifer, OK I just subscribed to your Blog. Not sure why I hadn't done that already. This place is soooo huge.

Pricing is critical. Especially now that the market has changed. It seems over the last few months I have been having difficulties myself trying to get the price right out of the gate. My market is declining so rapidly and houses are just not selling at any price. I'm also not a fan of built in price reductions. I much prefer to just constantly monitor my listings and make changes when necessary. My sellers and I speak a couple of times a week and we always talk pricing and possible reductions. when I do suggest a reduction they are ready.

It sometimes happens that we may price it right and an agent from another office may call you and leave anasty message as to why you priced it low.I had it happen once and she said she wanted to go and preview the house and that she knew the neighborhood. Actually it did not sell at that price, it was a 2 year old house and we had to reduce the price a few times till it finally sold.

Jennifer - I need to learn to be QUIET, as you said.  I'm still in the "oh, no" panic mode and realized the other day I'm appeasing my clients before they need to be appeased.  Thanks for your informative post, hopefully next time I'm in this situation I will remember your to do as you said.

Hey thanks for a great post.  Great useful information that puts you ahead of 90% of he agents in your market place.

Jennifer you have a good point.

I show my clients a updated CMA after a month and then let them decide to lower the price or not. If we are getting positive feedback from showing agents and their buyers, I ask my clients not to rush into lowering the price. From the very beginnng, it is important to have the home listed at a competitive price.

 

Jennifer _ your right if the house is priced right it will sell in 30 days. The problem is that you need to educate the seller on why they are wrong about the price they are thinking. I had a listing presentation where the seller was so proud of his house. When he remolded, and added on to it he overbuilt it for example instead of using 2x4 he used 4x8. He did it throughout the whole house, and was very proud of it. He had the biggest, house on the block; however the price he wanted was way over what it was really worth.  At the end of the presentation I told him that I didn`t believe that I was the right person for him, and recommended 3 other agents for him to talk to. One of them got the listing, but it never sold.

Dan - Oh well! Whenever I didn't 'get a listing due to price, I always watched to see what happened. It was almost fairy-tale-ish (for me anyway, not for the seller). The homes NEVER sold at the inflated price. Never. That helped me to trust myself and my expertise. Who'da thunk? I DO know what I'm doing!

Frank - We always hope that our clients need to sell their homes at least as much as we want them to... I bet when you don't pressure your clients to reduce it catches them off-guard! Cool!

Dan - I agree. I'm always pleasantly surprised at how having a strong opinion and being able to express it puts you way ahead of the pack.

Joddie - you're doing just fine. But yes, it took me YEARS to learn to just SHUT UP!!!

BB - Your market doesn't sound like much fun, frankly. Are agents falling out left and right? I bet this situation is really stretching your creativity!

I agree wholeheartedly about not reducing the price 99.99999% of the time. I left a small percentage open because I have had an occasion or two where I did reduce the price but as of my last few listings, I am doing all I can to avoid doing it anymore.

Price it right and it will sell. If a seller wants his property priced at more than it's worth, thank them for their time and move on to the next property. Nothing is worse than being the agent with a listing that has been on the market for 9 months and had the price reduced 7 times.

I think it takes away from the credibility of the agent. Now I don't see a problem with a property being on the market for 9 months because sometimes that's how long it takes to sell. My feeling is that a $600,000 property is a $600,000 property in an up market, a sliding market, or a down market. It just takes longer to find a $600,000 buyer... 

 

Rob Beland

Apex Properties

The Real Estate TrendMill

 

 

Jennifer,

Thanks for this post. In New Orleans, our market heavily in favor of buyers, so this topic always comes up.

There was even a FRONT PAGE article in our largest local newspaper that described sellers having an inflated sense of their home's value and refusing to lower their asking prices, leaving many homes on the market for well-over 6 months without a single offer.

Buyers just have so many options down here right now. Many also have the luxury to wait as long as they want.

The agents in my office always complain about being stuck in the difficult position of informing their sellers that the market just doesn't favor them. What a hard thing to convince someone of accepting!! But obviously, you've done pretty well at that! Congratulations!!

What are your thoughts on working for a builder? Such as KB Homes, Portrait Homes or Ryan Homes?

I completely agree. It is always about price.

I couldn't have said it better myself!  If we take the time to educate ourselves and our clients...Imagine the possibilities!

 BTW - Love your writing style and possitive attitude!  I'm a fan from agentsonline.net and found my way over to ActiveRain because of you.

Thanks!

Rebecca

..."review the market every 30 days and provide an updated CMA to him. Then, CASUALLY mention that due to the unstable market (or even declining if that's the case), the seller needs to be prepared that your 30-day CMA may show a lower market value. That your 60-day CMA may show an even lower value. You just want him to know this ahead of time so that he isn't surprised or blindsided." 

I thought this was a very clever idea.  I've done something similar to this but I like this idea much better.  Can't wait to try it out on future listings.  Great post.

Rebecca - THANKS! You made my day!!!!

Donna - It's amazing how much more effective it is to treat our clients as if they actually have a brain instead of beating them up with our agenda. Present the facts, let the client draw his own conclusion. Quite simple, actually! Thanks for all your warm comments I've seen on my blogs lately!

Thanks for the post.  Our market here is slow, and leveling off - a true buyer market here with high inventory.  My sellers are still hard-nosed, screaming "people should just bring me an offer".   I will work on yours (and other posts here) to help me price homes right initially, than listing homes in "fishing mode" to see who will bite.   I really liked Dan Adams suggestion about sending my sellers the new listings.  I need to get my mind right, and be more aggressive in not letting my sellers dictate the price.

The market is a funny thing... I have a listing 1236 Faithful Way, San Jacinto CA 92583-4426 that I priced $10 to $25,000 below what should be fair market value.  We even offered the buyers agent 4% commission.  It is all over the Internet.

In the first 30 days, I don't think it has been shown 3 times by other agents (I have shown it 3 times myself - to no avail).  Most buyers today are sitting on the fence waiting for the loud sound of the bubble popping.

John Occhi, Hemet CA REALTOR
Mission Grove Realty

One of the realtors I respect the most, who does well over 100 deals a year with an average sales price of over 500k, uses the automatic price reduction in his listings. I guess I don't totally agree with you. I agree with a lot of the concepts, but not the overall presentation.

One trick he shared with me was great. If he can't get the seller to see reality and reduce the price, he will take a price reduction agreement in one hand and a cancellation agreement in the other and make the seller choose. Obviously, he presents it with the correct attitude, but still presents it.

Hey how about instead of lowering a price when the seller is willing to take less....offer an incentive to buy?  One such new program that lenders are offering is up to 6 months payments made when they buy "this" house.  The money is taken from the sellers side of the transaction (I think its up to 6% of the sales price) and they hold it in an escrow account and make all the payments for the new buyer.  Market it as "Move in today and make no payments for up to 6 months!"

Just an idea I thought I'd throw out there!

I say  it is better to give higher commissions or add concessions for the seller before lowering the price. You get paid commission from the selling price right?

I couldn't agree with you more.  It is very difficult to deal with an overpriced property from the buyer's viewpoint.  I am working on a situation like that now.  He seller's agent/seller over-priced the property to begin with.  The Seller just dropped the price $x.00 -- the problem is that even with the price drop, the property WILL not appriase.  I went over the comps with the seller's agent and she agrees -- however, she said BUT the seller JUST dropped by $X.) I said that great, but how is the seller going to feel when the property doesn't appraise -- the Seller is trying to buy another property -- (we have a buyer's market in NH) and buyers aren't going to pay over the appraised value!  So there we are -- It is very frustrating indeed.  The buyers are moving from another state and the option of backing out of the contract or paying more than what the house is worth are not options.

Taking an overpriced listing, then getting it in line in 30 days, often accompanies an ad that says "Reduced $XXX,000".  I've always thought that was dumb - it's really saying "We were previously wrong about our price, and now we're hoping you will forgive us and come take a look!"

Try to get it right from the get-go, when there is a possibility of excitement with the newness!

Jennifer:

I like your way of thinking.  Sometimes, it seems listing agents are too quick to drop the price and may lean on that as a crutch.  In this market I think it is important to price it to sell at the beginning and forget about chasing the market later.

 

If you ever sell real estate in the Sunshine State look me up and we can do some business. 

OK Jennifer, now THIS is a great idea.  I usually take pre-dated price reductions at the time of listing, but educating the seller with a new CMA is another way to get the job done.  I also find that showing a seller exactly what the mortgage payment will be on his home for the new buyer is a very eye opening exercise.  Thanks for the new perspective on an old problem.

 

 

I agree with you, sort of...but in our stabilizing and sometimes declining market a house listed last month maybe worth less this month. LV has 25,000+ single family residences on the market...75% of them are overpriced, over half of them are short sales or foreclosures...we listed our house 6 weeks ago, we are $8,000 lower than the comps, we are lower than anything else listed in the subdivision/area in our square footage, we are in good condition, and my Realtor is the BEST (it's me!).  There is no reason our house should not get more lookers and/or an offer...a price reduction may be in order, although I hate to do it!

Very thoughtful and shows a lot of experience.  Bottom line is, of course, if the seller insists on a price that you KNOW is too high, don't take it. 

That is the message that needs to get out in our market.

Jennifer, I try to make sure the properties I represent are priced correctly.  My last listing sold in 11 days.  The market is what drives the price but the buyers are the ones that decide if the price is right.  Mine sold within $900.00 of the list price.  This does not always happen, as we all know, but when it does the seller's smile too!  Nice post.

Jennifer,

What a great post---Unfortunately, I'm right now working with getting a serious price reduction for an over priced listing---mind you, it wasn't over priced by much more than $10,000 when I took it but the market is so fluid right now that things change quickly. 

I hate being right on price and then list it higher at the seller's insistence, I just costs me money.

When I take an overpriced listing, I use the approach of new CMA every 30 days and adjust price accordingly. I also mention at the time of listing that they will likely get below market value if the property sits on the market for too long.

If their objection is we can take it off the market and re-list it later, I point out that REALTORS have access to the listing history so not much is accomplished with this strategy.

Great Post!!

I'm in a slow market and when I say slow I mean gooey caramel slow, gooey caramel in the winter slow.

Nonetheless, I listed a home in May and got offers on it within 12 ours of putting it in the MLS. I was on my way to put up my yard sign when the first offer came in.

How did I do that? It was priced under market value (divorcing sellers not looking for a profit). They told me to price it for the quickest sale possible. That's exactly what I did. It sold like hot pancakes.

Jennifer,  Awesome post... I felt so bad for my neighbor she chose a friend to help sell her house.  He told her to mark it high and then ever 2 weeks you keep lowering your price... I told her it sounds like you are selling in fear... needless to say the house did not sell..

I agree that I do not believe in price reductions.  Like yourself, I always shoot for the 30 day sale.  Sometimes I reach it, sometimes I don't.

But when a seller becomes aggrevated (such as in times like these) and they ask to reduce, I stand my ground.  If we are priced correctly, it will sell!

It's all about the price, unfortunately there are so many agents out there today someone is always willing to take an overpriced listing

A lot of new agents think that any listing is a good listing because it generates calls from buyers. Unfortunately (?) our duty is not to the buyers our listing might attract, but our seller who is depending on us to properly advise him. But from a purely selfish perspective, an overpriced listing is NO FUN!

Wonderful post, very good ideas, workable strategies, great customer service. 

Fran

Great post, great ideas. Thanks!

I'm not certain that I agree with your theory.  It all depends on having enough interested buyers looking at it within a short period of time. 

It's kind of like an auction.  Sometimes the buyers who might offer a high price just don't show up at the right time.

Many times a buyer wouldn't buy a home no matter how low you priced it.  It just doesn't have what they are looking for. 

I can agree with this idea for the most part.  I had a wonderful home where the seller listened to what I had to say, plus this home was staged well and in less than 14 days this home had an offer.  It was a listing I could only wish more like it would come my way.  This seller was even a FSBO prior to listing with me.  Thanks for your thoughts.

i have come across sellers with huge home equity lines and what not. Some are forced into these unrealistic asking prices. And the house justs sits.

South Lake Tahoe:

We're from the Miss Delta and I get really tickled at reading and listening to someone so close to home. Our parents still live there, and we've also got family living in Birmingham.

There is nothing we deal with more than overpricing. It runs with the turf up here in a second home market where most sellers raison d'etre, and mantra, is "I don't really have to sell."  It's a constant challenge determining which ones to take, when not to, and when to let them go. 

Really appreciate this post, and when we're looking at a post with different market conditions than ours, what we all need to look for are the similarities, not the differences. That's the mind set we were in when we read this, and it was to the point and appreciated.

Cheers...

Great post, Jennifer. Very informative. The topic of price reductions is always a tough one, but if prepared in advance, as you say, it becomes, easier. Better to get to priced to sell first, of course. And the shift from seller's to buyer's market is always difficult for the sellers to adjust to, espeically when it is dramatic.

Thanks for sharing your thoughts on this subject.

Jeff

Jennifer, as usual, BRILLIANT post! You make some great points and I couldn't agree with you more on the built-in price reductions. If we're doing our job correctly, most houses WILL sell that quickly, period. Our job includes pricing a home correctly and marketing it correctly. Thanks for sharing your thoughts with us. You've put into words for me some of the thoughts I work so hard to get my sellers to understand.

I dont think an automatic price reduction would be allowed here in Florida... interesting post

I'd love to reduce the price.  In fact, my seller has finally suggested it (after reducing it twice already).  Before we do that, I'd like to make things actually better for a buyer without affecting comps in the area.  Wouldn't a "package" be better?  For example, offer a seller credit or a 3-2-1 rate buy-down to help the buyer qualify and feel more comfortable at least until they can refi or sell in year 3. 

I think reducing the price is an alternative but it's akin to Microsoft Tech Support saying "reboot".  It's the easy way out and doesn't show that I know the various elements of marketing real estate.

It's all about making the solution work for both parties. 

Hmmm...I think what is forgotten is that when you have given a little on the price as a concession to the seller to list and then suggest a reduction as you have may have suggested or written in the contract, because all of a sudden you are not doing what the seller perceived as in "his best interest", your title of "Authority" usually gets stripped and now the seller becomes the authority because his friend, neighbor, relative did such and such....Even explaining at the onset of the listing that we are in a price driven market does not make the seller blink because after all HIS house is better, bigger, more updated.....and so it goes....

I believe in price reductions (Only if you cannot get the seller to price it right in the beginning).  What I don't believe in is announcing to the world that it's been reduced.  IMO, The worst thing you can do to your seller is put a big PRICE REDCUCED rider on a house!

Excellent piece.  I think the problem that a lot of agents have is that they don't know when to be quiet.  We have to have enough confidence in ourselves and our research to let it speak for itself. 

Jennifer...

Yup. The Salespeople in our market are dropping like flies. That's a good thing for us. While they exit the market we keep doing what we do. We have been down this road before in our market and we are blessed that we know better than to put all our eggs into the 'real estate' basket :)

As for stretching our creativity. Yah. It's being stretched and that's a good thing too. When we stretch our creativity like this we always come up with something innovative :)

TLW...ROAR!

Jennifer,

 Like others have stated, Great Post. I am a General Manager for a Real Estate company and we strive to teach our associates this very methodology. You could have learned it from us (or us from you).

That leads to my question, "What is your source for learning these skills?"

Specifically the Ask a Question then let the seller think and respond while you watch and listen?

thanks,

Dave

Thanks for a great post!  You made some good points.  Some sellers are greedy and some agents want any listing.

www.FortBendhomefinder.com

Great post Jennifer and many great comments too!

I mention one word to Sellers that gets them thinking (sometimes anyway): "Appraisal." You can list your home for anything you wish. If it doesn't appraise, you'll have more problems than you can imagine at a time when you are most vulnerable and in less of a bargaining position.  

Hmmmm. so your saying I should stick to my guns and it is better to not sell the clients house in this market, and not make any commission. But if I do get clients to lower the price by about $5000 or $10,000 and that cuts the commission by about $300 or $400, I always thought one should do what is best for the client....selling their house. And not put the commission first...I was always told to put the client first.

Jennifer,

My goal at the listing table is to price it right. I show my sellers all my stats and ammunition to price it right the first time. I am pretty successful. I tell the sellers "Do you want me to tell you what you want to hear or tell you the truth?"

An interesting statistic is the DOM AFTER a price change? This is not published and you need to search 'history' to find this out.

Check this out, you'll be surprised.

An agent out of town (early 2006), where I had a listing was mentioned as a top agent; It wasn't hard to see her sales, market share and also percent of list price obtained...her "days on the market" was interesting.

It was clear she priced these houses WAY HIGH, whether it was HER idea or the owners (was a declining market too), I don't know, but it is clear she gave them a crack at the highest possible price. What I found interesting is that her price changes came after" EXACTLY 2 GOOD weekends (no holidays or holydays or severe weather) on the market, and would make the actual price change on a WEDNESDAY, in an apparent attempt to get feedback from Sat-Sun showings, and well in advance of the NEXT weekend.

Her strategy seemed to work; it was a declining market, and the price reductions were $10-15k on a $450k property. Some had a series of price reductions.

THIS prompted my study of DOM AFTER a price change. Try it yourself!

I could explain more about my theory, but no time now...

Walt 

 

Jennifer,

Thanks for the post. We are advisers to our clients. I share with them my thoughts based upon market data. We talk about strategies and the potential ramifications of each. In the end it is always the seller's decision. I work toward helping it to be an informed one.

 

Excellent post.  I have bookmarked and feel I will be coming back quite a few times!

Great idea here! I have a listing right now that will expire in a few weeks. Because of condition I believe it is a bit overpriced. Four kids and lack of extra housecleaning have about done it in. The sellers can't reduce much more because of what they owe on it. Who knows how this will turn out!

Great concept. I am more aggressive in that aspect that 90% of the agents in our market, but sometimes I am bad for taking higher priced listings. In this market, I need to pass them up. I do, but sometimes not enough. Thanks for your input.

great observations and advise. this is a challenging subject and has be dealt with.  Thanks for the great post

Timing-price-location, and then there is California. In this market  you really have to keep on top of your data game. There are so many variables. Thank you for sharing your very well prepared prospective.

The biggest problem with price presentation is that even in markets where price is tumbling and is obviously decisive, where it is reported almost daily in the media, where buyers have thousands of choices, sellers may understand that there are a lot of homes out there on the market and many of them are priced at a level at which they'll never sell---but they do NOT believe that this is true of THEIR house. Everyone else is overpriced, but my house is priced right. "I'm not going to give it away."

David - yep! And, for the record, I've done the exact same thing. In fact, I'll be putting two of my own properties on the market next month and I'll have to fight with myself not to overprice cause I'm so darn special. Trying to keep that $3000 monthly mortgage on my mind instead of worrying about doubling my money...

Some sellers, with the education and updates we provide really do understand the market and what the next step is, some really need our guidance every step of the way....

It's always fun to go back and re-read some of the great posts, and this one came up in my email after a previous comment.  Still makes a lot of sense, and great approach for any listing agent anywhere right now.