Three agents dish on their best practices for handling expectations for pricing a home
By Stephanie Andre
RISMEDIA, Feb. 22, 2007-Inventories are up and the market is down, say many real estate prognosticators. Although the market has turned from a seller's market to a buyer's market, some sellers are still a bit unwilling to budge, convinced that "their home" is still worth its weight in gold. Here, three agents dish on how to best handle pricing expectation issues:
RISMedia: As listing time increases, how do you help home sellers settle on the right listing price to sell the home?
Traci Kasparian, broker/owner, Real Living Lifetime Real Estate, Northborough, Massachusetts: For any listing agent, it's always been wise to take both price and time on the market into consideration, but now more so than ever. When pricing a home, money isn't the only factor. How quickly a seller wants to sell the property also comes into play. I developed an X &Y axis grid with both time and price. I color code properties (active, under contract, and sold) that are comparable to the subject property. It becomes very clear when I show the grid to sellers that depending upon their timeline for sale; the right price will highlight itself. Sometimes, sellers need to see the objective data before they believe everything you try to tell them: pricing honestly, I'm not afraid to share that data with them. Doing so sets realistic expectations upfront and establishes the groundwork for a trusting relationship between client and agent.
Alex Chaparro, broker/owner, Hudson Street Homes, Chicago, Illinois: Whenever there's any market fluctuation, we go back to basics and pay close attention to CMAs. What has happened in the past is people say they want to "test the market." Now, buyers and sellers are very educated and need to pay close attention to the CMA; it will ensure a good price and the lowest time frame.
Dwayne West, broker/owner of Residential Brokers, Atlanta, Georgia: I always start with a CMA (competitive price analysis). From there, I take them with me into homes within the same price range and put themselves in the buyer's shoes. Our market is increasing, and people hear rumors about what homes sell for. We try to show them that their home will not sell at what they want to sell it for.
RISMedia: How do you help sellers have realistic expectations on what price their home should sell at?
TK: Share the data, not just your opinion. We all use objective data in conjunction with our subjective opinions: share it. Illustrate your rationale for pricing a property. One, it shows that you put some science and mathematics into the equation of pricing a property to sell; two, it illustrates to the seller that selling real estate is far more than a guessing game; and, three, it contributes to your credibility as a professional real estate agent or broker. Lastly, from a sales psychology standpoint (Kasparian has a doctoral degree in clinical psychology), people hear and learn differently: by presenting data both verbally and visually, subjectively and objectively the communication lines are clearer and information is less likely to be lost in translation leading to fewer misunderstandings and a healthier relationship between agent and client.
AC: The Realtor is a big component in conveying that information to the client. They should really be explaining how the information is gathered and how it's going to relate to the marketing of their home. What does the competition look like? That type of information brings them down to reality. Have a dialogue with your client. Accurate pricing is imperative, especially if something happens in the market. Homes that are not priced properly don't sell. Realtors need to understand the market and articulate that to the client.
DW: I try to show them examples-this home sold at "X" price and took this long. I also try to give them different scenarios-if you sell at this price, this amount of time, etc.
RISMedia: Do you ever walk away from a listing that's priced too high?
TK: If I was working with a seller who refused to consider a price change, then I would discuss with the seller that I may not be the right person to list their house going forward. We are in the real estate business to sell properties not simply list them. If a listing is priced too high and the seller refuses to consider a price reduction, then walking away is a viable option as continuing to market a property that is overpriced costs money that most agents and brokers spend upfront and will not recoup if a property does not sell. Likewise, to me, a seller that wants to price their home too high for the market and refuses to consider a price change might also be inflexible to unforeseen market changes going forward. In an unpredictable market, that's a red flag.
AC: Yes, I have. The problem is that you're not going to be able to sell it. It would be an injustice to the client to take their listing. I try to convince them keep the home in a reasonable price range, but sometimes that just doesn't work out.
DW: Yes, I have declined listings before. I don't like to keep my sign in a yard for any amount of time. I won't work with people who won't budge. When I first started in this business, I would work with sellers like this, with the hope that they would soften up on the price. Now, I don't have the time or patience. That said, it doesn't happen that often. I have very few in a year.