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Real Estate Pricing Strategy and Price Reduction Conversations | #TomFerryShow


– Hey everybody, welcome
to the Tom Ferry Show. On the road, in a car,
wanna get right to it. (slow heavy bass rock music) There’s no doubt, as I’ve been talkin’ about and you’ve been feeling it, there are changes happening in the market. Now I don’t mean the world is falling apart under any circumstances. What is happening, though,
and you see it in your town, the areas that used to
be selling (finger snap) in two seconds by just putting in the MLS are now sitting on the market, those properties, a little bit longer. Which tells me that you and I, we need to get ahead of the curve on our pricing strategy and we gotta get comfortable asking for price reductions. I wanna reiterate, as
I’ve said a few times, certainly on Facebook
Live and Instagram Live, that the vast majority of
real estate professionals, maybe you watching this, call
it four, five, 600,000 people, have never been in a market
like we’re going into. So skills matter, my friends. Let me just remind you first and foremost, today when it comes to pricing, obviously, you have to figure out is this a speculative seller or
is this a real seller. I think that the marketplace
we’re going into, unless the property is so exceptional, so unbelievable, so unique, so rare, taking that speculative
listing, that seller that, if they could get their
price they would move, is just gonna be a bad idea. Bad for you, bad for your
timing, bad for your business. So, we wanna move away
from the speculative sellers and we wanna focus on the ones that (finger snap) absolutely
have to sell their home. Not the ones that feel like, oh my god, I gotta give it away, but they
have true motivation to move. Moving up, moving down, moving
out, you know the drill. The first thing I would
say to you is go back to early Tom Ferry shows
where we talked about agents, for the most part, when you’re
competing, you can say this. There’s so many great lines,
I wanna give you some lines. You’re walkin’ in the door. You’re goin’ into your
listing presentation. You’re starting your pitch,
and you get to price, and you say, Mr. and Mrs.
Seller, let’s be clear. I could line up a thousand agents out your door and because we’re all looking at the same data inside the MLS and others, because we’re all looking
at the same stats, we’re all gonna give you
a price within a range of one or 2% because we’re
all looking at the same comps. So you’re not hiring me just about price, you’re hiring me to market
and expose your home to the highest number
of qualified buyers and the agents that represent them on the vast majority of platforms, digital, social, and everything so we
find that buyer for you. So let’s talk about marketing. That, my friends, is
an important line that you may wanna start incorporating. Again, I can line up a
thousand agents out the door. We’re all lookin’ at the same stats. We all see the same comps. We’re all gonna give you
between one and 2%, right? So it’s not about an agent that gives you the highest or the lowest price, it’s really about who’s gonna market your home the most successfully. And then you go into your marketing, and you get the yes on the marketing, then you come back to price. Now, again, I’ve done a lot of work on the Tom Ferry Show on this specific subject, so you can go through
and watch this in-depth where I did one entire show on it, but I wanna remind you high level. In a competitive
situation, which we’re in, they’re gonna be talking to other agents, and we know that the vast majority of agents aren’t paying attention. They’re gonna overprice it. They’re gonna undercut their commissions. They’re gonna do whatever it takes to win. We need to counter that. We need to counter that. And counter the discounters, so let’s get into both of those. The first counter is to say
to the clients, sellers, you can meet with 10
agents and I can tell you right now that 10 out of 10 minus myself, they’re gonna walk in
and they’re gonna say, here’s your price, right? Or worse, they’re gonna ask you, what do you guys wanna sell your home for? And I’m not saying that that’s
not an appropriate question, Mr. and Mrs. Seller, Mr.
Seller, but here’s the reality. An agent that only has a
one price pricing strategy is not the agent that
gets the highest possible net proceeds for their
clients in this environment. I, on the other hand, have
a three pricing strategy empowering you to decide what is the right strategy for you guys
in your circumstance. Let me explain. The three pricing
strategies, number one is, we go for the highest possible price. We wanna break all records, and I actually will say to clients, what we’re saying is,
needle in the haystack. You’re saying, Tom, I’m
gonna hire you for your marketing to find me the
needle in the haystack. And look, it happens every now and then, but the vast majority of
those homes in this market, they sit on the market ’cause they’re simply pricing it too high. But I acknowledge that that is a strategy. The second strategy, the
most likely strategy, is we look at the comps together, we look at the information together, and we say, let’s price it basically what we would call fair market value. Fair market value is what
the buyers are gonna see. It’s what the lenders are gonna lend to. It is the norm in the market,
regardless of, you know, the things that we love about your home, which we all love about your home, people are still gonna say,
well, the data tells us this and that’s what
we’re gonna write towards. That’s the second pricing strategy. My savviest of clients,
my savviest of sellers, will say to me, Tom, we
don’t wanna give it away. We wanna get the highest possible price. Let’s do somethin’ different. And that’s where I say, let’s price it below fair market value. Let me explain before you get shocked. We’re gonna price it below fair market value because what do we know? When you have a nice home like yours, in a great neighborhood like this, and you price it below fair market value, suddenly you have what’s
called that auction experience. That bidding war opportunity
where we do all the marketing that I agreed to a minute ago, all the things we’re gonna
do to bring in the buyers, to bring in the agents. The world’s gonna know
your home is for sale. We’re gonna unveil this thing beautifully. And when people see it just
below fair market value, it becomes a frenzy. And Mr. and Mrs. Seller, I’m gonna advise you that
creating that frenzy, creating that frenzy means bidding wars, and when bidding wars
happen, prices actually, in many cases, go above that
second pricing strategy, above fair market value,
and could even lead towards maybe the needle in the haystack. So I’m asking you, with
knowing what you know now, seeing the comps and we’re
in this presentation, you’re in the moment,
seeing what you see now, which of the three pricing
strategies do you feel will get you the highest
possible net proceeds? And bam. Now obviously, you’ve already
walked them through the comps. You’ve already showed
them the needle in the haystack prices that are now expiring, that are now, have been
sitting on the market for six months, eight
months, nine months, a year, dependent upon your price point, especially in the high
end, and you know what? The savviest of sellers are,
if they’re the nonspeculative, I’ll only sell if I get
a crazy price seller, the normal sellers, guess what? They’re gonna go here or there, and when that happens
(finger snap), you win. So that’s the first thing. And if not that presentation, those two little scripts I just gave you, if not those, what are you gonna do? What are ya gonna do in a changing market to be ahead of the curve, to service your client
at the highest level, and make sure they’re
not sitting on the market for three months, five months, six months? We want to avoid that trap. So that’s one consideration
I want you to think about. The other one is price reductions. If half the real estate
agents in North America have not been in a marketplace like this, it’s pretty safe to say
they haven’t set up that communication strategy, that
tactic of communication, with their sellers on a weekly
basis, on a monthly basis, where you’re educating and informing them about the things that we need to do, what’s happening in the market, the number of showings, et cetera. So the first thing I would ask you is, do you have that in place? Do you already say in all of
your listing appointments, we’re gonna talk every
Monday at 5 o’clock, or every Monday between four and six, and I’m gonna update you
on what’s happened in the last week so you are
empowered, Mr. and Mrs. Seller, to make the right decision
and you’re informed about what’s happening in the market. So we say, here’s the
number of new listings. Here’s the number of pendings. Here’s the number of price amendments. Here’s the number of
cancellations, expireds. You’re informing them on what’s going on, and then feeding them the
data around the showings, and the feedback of your showings. If that isn’t in place, if you’re not informing them of the data, of the number of
showings, of the feedback, and what’s happening in
the market, specifically, properties like theirs and
around move up and above them, if you’re not doin’ that, in my opinion, you haven’t earned the right
to ask for a price reduction. You haven’t earned the credibility, the swag with them, to
ask for a price reduction. So, you do all that,
and then what do you do? You’re 30 days in and you say, 45 days in, you pick the time. Mr. and Mrs. Seller, we’re on the phone, I take you through all
the numbers and then the script that I love that we
developed many years ago in the old market that
perhaps we’re coming back to, went something like this. So, I wanna give you an
update on the market. Here’s what’s happening,
here’s what’s goin’ on, here’s the data, here’s the
showings, they’re falling off, here’s the feedback,
here’s what’s happening, closings, yada yada,
expired, sold, nine yards. You’re informed. And then I’m gonna say to them, so here’s what we have to decide. Right now, right now the
agents in the marketplace, the overall market, and most importantly, the buyers, have rejected our price. The agents, the market,
and most importantly, the buyers, have rejected our,
not your price, our price. They’ve rejected our price. What would you like to do? What would you like to do? And you just shut up. What would you like to do? And they, uh, uh, uh, well,
could you market it more? Could you do another open house? Like, you know, are you doing enough? Like, you know, what about that one person that just came through? Let ’em go through all of that. What would you like to do? And, you know, many of them, because you’ve earned the trust, ’cause you’ve been educating ’em, you’ve been informing ’em what’s goin’ on, they’re gonna say to you,
what do you recommend? And you’re gonna say, look, I’m gonna strongly recommend
we amend the price. Amend the price. Now I know price reduction
is what I lead with. I think amend is just
a softer word, right? Maybe it doesn’t feel as harsh for people, like reduce the price, though
it’s okay if you say that. I recommend we amend the
price to be in alignment with what the buyers are willing
to pay in this marketplace. And then you make the
recommendation of the price. At the same, the same time,
if there’s something about the house that is throwing the buyers off, that agents are giving you feedback on, it’s also okay to say,
you know, at this point, I’m gonna recommend we repackage, reposition, and amend the price. We repackage and reposition the home, and we amend the price. I know I’m giving you
lots of scripts here. You’re probably gonna wanna
watch this three or four times. I’m gonna recommend we
repackage and reposition and ultimately amend the price on
your property to get it sold. What do you mean? Well, as I mentioned to you,
we probably needed to stage it. We probably need to redo the back yard. The lawn and the landscaping
up front isn’t great. The door of the building isn’t ideal. The things that we can
adjust that would just be in alignment for what buyers’
expectations are today. I wanted to share all this with you. What I really, really, really wanna stress is number one, I’m not being
negative about the market. I’m just paying attention to it. The world goes in cycles. Everyone is talking about it. Some agents are really feeling it. Other agents don’t feel it at all. That was the same thing in 2005. It was the same thing I heard for parts of the country in 2006. And by seven, eight, nine,
and we’re not expecting that level of craziness,
that level of devastation, but we are expecting that adjustment. I just want you to be ahead of the curve. Skills matter. What you say matters. Knowing how to package
yourself and position yourself and the dialogue
required to really properly inform and empower
and educate a customer, to make the right choice, not just listen to the
highest possible price, move on, hope and pray
to the real estate gods. So, that’s the message I
wanted to share with you. Excuse maybe the little bouncy, bouncy. We’re in a car, Tristan’s
behind the camera, can’t wait to introduce you to him. We’ve got three videographers
now inside the office, I’m super fired up. Expect lots of cool stuff comin’. So, gimme some comments,
what do you like about it, what are you nervous about,
what’s goin’ on, how can I help? Facebook, Tom Ferry, YouTube,
I’ll respond to all of it. All right, take care guys. Remember always your strategy matters. And now more than ever, your passion and your
pricing absolutely rules. Hey, it’s coach Tom Ferry. Have you been considering hiring a coach? If so, click the link below
and check out what we do. (world beat music)

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