It’s been a rollercoaster ride for home prices over the past couple of years, with prices skyrocketing then ticking back down. In this session, moderator Richard Haggerty, CEO of OneKey® MLS, led a panel that included Eric Landry, a REALTOR® with Portside Real Estate Group; Tina Holt, senior vice president and regional manager of Long & Foster Real Estate; Jackie Louh, COO of Lamacchia Realty Inc.; and Kelly Sand, a REALTOR® with CENTURY 21 Morrison Realty – HomeVest Team.
The panelists agreed that the current market conditions, characterized by low inventory and high prices, require a strategic approach to pricing. They emphasized the importance of using the most recent market data to advise sellers and buyers, and suggested that sellers should price within market value to attract multiple offers.
For buyers, they recommended making the best offer possible to avoid losing out in bidding wars. They also highlighted the importance of having all decision-makers present during pricing discussions and being prepared to walk away from a listing if the seller’s price expectations are unrealistic.
Specific points included:
- Holt advised not worrying about what others are doing and to trust the professionals.
- Louh advised sellers to price within market value and buyers to buy a house and refinance later.
- Landry suggested having all decision-makers present during the initial meeting and using data to set realistic expectations for sellers. He also mentioned the possibility of doing pre-marketing tours and showing properties at lower price points to help sellers understand the market.
- Sand emphasized the importance of setting seller expectations and providing data to support pricing decisions. She also mentioned the need to compare current data to previous years for reference.
Overall, the panelists emphasized the importance of using data, setting realistic expectations and trusting the professionals in the real estate market. Haggerty requested they comment on the challenges they experience when handling seller expectations.
“With the low inventory, a lot of times sellers feel that they can price slightly above market value range, and that is just proven to not work,” said Holt. “Quite frankly, our average days on the market is about 11. Homes priced above market value are sitting longer. We’re actually seeing price reductions. At the end of the day, that’s often leaving sellers with less of a net had they priced appropriately and at least within market range to begin with.”
Sand pointed out that it’s not a seller’s job to understand the market, so agents must teach them the realities.
“Make sure you’re the one setting their expectation versus things that they’re going to hear out there,” she said. “If you’re going to give them advice, back it up with absorption rates and market stocks and things like that, so they can have appropriate expectations.”
Haggerty noted that it is imperative to stay current with the prices at which homes are selling in the area, and more.
“It can’t just be sold data,” he said. “You have to keep your ear to the ground and know what contract prices are because the market is just so changing right now that you’ve really got to focus on having the most current data you possibly can.”
Landry echoed those thoughts, adding that “some of the challenges we’re facing are that the expectation is a quick, quick move, a quick sale. However, in order to get that, what we have found is that if you give them a range, a current range of what’s on the market, not what sold six months ago, it’ll help them understand. We also match that with the volume of showings because it really helps get them excited around pricing correctly.
“It’s easy to pick overpriced and show them the lack of showings, and then the right price and the heat of the showings. Oftentimes, with that type of data, you can help them get their mind around, do we want to miss the buyer parade? If you go to market too high, you stand the risk of missing that buyer parade entirely.”
Haggerty next targeted Louh specifically because he wanted information on how someone in a position of leadership at a brokerage with a lot of agents handles training responsibilities as far as how they deal with expectations and the challenges with sellers and pricing.
“Again, it really just comes down to educating your sellers and your buyers,” she said. “A lot of sellers are still a bit unrealistic about what their homes are worth because they’re looking at what their neighbor’s house sold for maybe last spring, and they think they can still get that price. And in some markets they might still be able to do that. But speaking broadly, that’s a big issue that we’re seeing along with sellers not factoring in the higher interest rates compared to where they’ve been in years past. So they don’t fully understand that the buyer’s affordability has changed.
“A buyer that maybe could afford $600,000 a couple of years ago maybe now can only afford $450,000 with these rates. So it breaks down to talking to the clients about what the difference in the interest rates mean, showing them market reports. What is on the market right now? How are you going to position yourself within that market to get the most eyeballs on your home? As far as training goes, we train every single week. Agents are having to have conversations now that they’ve not had to have the past couple of years because of the way the market has been. So we’re teaching them how they need to talk to sellers, the information they need to be presenting to get them to understand the importance of pricing the home accurately right out of the gate.”
Logic and facts, unfortunately, will not always carry the day. Haggerty asked, “What do you do with that seller who is not being realistic? They’re looking at the national headlines, but they’re adamant that they think they’ve got the best property on the market, best property on the block, and they’re insistent that in this current environment, they’re sticking to their price. How do you advise that seller? Do you take that listing?”
Sand noted that as far as setting client expectations when they go into pricing, that even if they are higher than you would like them to be, it’s completely their decision.
“It’s their home,” she said. “You’re there to control the process. They’re there to control their decisions. It’s their transaction, and it’s their money and their livelihood. If it’s way above what you’re comfortable pricing it at, you absolutely have the option to decline. Otherwise, at that point, it can be a negotiation, and you can talk to them about offering it at the price that they’re comfortable with, but you need to see certain things done to the home.
“Maybe it needs to be repainted, maybe this or that needs to be freshened up, so have those conversations as far as condition. And what we like to do is preplan price drops. That way when we have to bring it up, they’re not surprised. We’ll tell them, depending on the price of their home and things like that, if we go X number of days with no showings, or X number of showings with no offers, we’re going to reduce it by X%. And all those numbers are going to change depending on the property. If we have it preplanned and the movement isn’t happening, they’re not surprised when we have that conversation, and they’re much more likely to sign that price-drop addendum.”
Louh is more strident, feeling that there’s no point in an agent wasting their time and effort if the price point is clearly out of bounds.
“Maybe it’s an unpopular opinion, but I’m a proponent of if the price is way off and it isn’t going to sell for what the seller wants, then unfortunately walk away,” she said. “It doesn’t make sense to continue with it if you know it’s just not going to sell. But before you get to that point, that’s the reality of working with sellers. They often think their home’s worth more than what the market is telling you it’s worth.
“There are times where you can get away with listing a little bit higher when there are fewer homes on the market, and higher buyer demands, but if it’s not one of those times, don’t be afraid to have that firm conversation with your seller. Say to your seller, ‘Okay, we’ll list it at the price you want, but if it doesn’t sell in the first, say, two to three weeks, what’s plan B?’ That’s the conversation you need to have with them if you’re going to go with their price.”
Louh added that it’s a must to involve everyone in the process.
“We always tell our agents when booking an appointment to make sure everybody who is involved has a say at that same meeting,” she said. “That way everyone is on the same page, because one person may be on board with selling for a certain amount, and they may like our marketing pitch and all of that, but the other decision-maker may not feel the same way. So it’s important that all parties involved are at the initial meeting where you’re talking about the price.”
