Congratulations! You've landed the listing. That's great news!
But there's also some bad news. The sellers are insisting on a too high price. You know the home will never sell at that price. So when the time inevitably comes to ask for a price reduction, how do you go about it?
Here’s what I am going to show you in this blog:
- How to know upfront if the home is even worth listing in the first place. By asking a few simple questions, you can determine if a seller will be willing to reduce the price to sell the home. This helps you avoid wasting time on sellers that aren’t now and will never be motivated to sell their homes for a fair price.
- How to show the seller it isn’t your fault the home isn’t selling for their original high price.
- How to build a solid system that will keep the pressure on the seller to reduce the price.
- How often you should ask for a price reduction.
- How to stop sellers from calling you to complain about how their homes haven’t sold.
How to Get a Seller To Reduce Their Price:
For a seller to reduce their price, they have to be told a number of times. Business to business salespeople often say it takes seven sales calls to get a customer and 29 calls to get a customer to trust the salesperson.
I don’t know if those numbers are correct. But, I do know that people get emotionally involved when they sell their homes.
Normal, nice, rational, smart people can’t understand how their home isn’t worth what they think it should be.
And if you can’t sell their home for what they think it’s worth, it’s your fault. That’s why we have to use as many methods as possible to bring them to reality so they’ll price their homes competitively.
If we don’t, the home will expire and another agent will sell it for them. The sad thing is that agent will probably get them to reduce the price to sell.
Let’s go through the methods I use:
1. Call every week.
Calling every week builds rapport with the sellers and lets them know we are working and doing something to sell the home.
This is the biggest key to keeping sellers happy with you as their agent. I call them every week even if nothing is going on. I simply tell them that we didn’t have any showings, that other homes are still selling, and that we might need to reduce the price. Don’t be afraid to call them. Just don’t skip doing it for a while, then start up again.
2. Follow up on showings quickly.
Call the seller when you hear the feedback from a showing. This is the perfect time to ask for a price reduction if they haven’t been getting any interest in a few weeks.
3. Ask for a price reduction every 21 days.
If you just reduced the price and the activity didn’t pick up, start asking for a price reduction after another 21 days.
It will take them 2-3 weeks to agree with you and reduce the price. If you tell them the reason the home isn’t selling (price and condition), they won’t call you and complain as much.
4. Don’t take pathetic price reductions.
If you reduce a home from $659,000 to $654,900, it won’t make any difference.
Turn down the small price reductions until you get the 5-10% that will cause the home to sell. If you go from $659,000 to $599,000, that is a meaningful price reduction that will make a difference and get more buyers in the door.
When I take a price reduction, I always try to get it reduced below the next round number that buyers search within. For example, I wouldn’t reduce from $267,900 to $252,000.
I would instead push for $249,900 and tell them that at $252,000, you are still competing with the homes priced at $275,000, which are probably nicer and more likely to sell.
5. Send them an updated CMA whenever you think it’s necessary.
I have found that not being too pushy with reductions gets the job done.
If they are being very resistant and you know you have to be pushy, push, but also send them an updated CMA and other competitive active listings in the mail. Email doesn’t work because they can just delete it.
6. Talk to both parties every week.
Here is what can happen if you don’t. Let’s say the house was FSBO and then you listed it. The ‘’Macho Man’’ husband will have his ego to protect.
First, he thought he was so smart that he could sell the home by himself. Now that he has listed the home, if he takes a lower price, it means that he has failed again.
So if you just call him with the updates every week, he probably won’t tell his wife what is really happening.
‘’Honey, what’s going on with the home?’’ his wife asks him. The husband replies, ‘’Well, I talked to the Realtor today, and he said everything is fine with the sale.
He thinks that we should get a buyer real soon and we just have to be patient.’’ Meanwhile, you’re telling him that the price needs to be reduced because you aren’t getting any showings.
7. Don’t feel bad that you are asking them to reduce their price.
The biggest objection that all Realtors face is not the objection from the seller or buyer. It’s the objection in our own heads.
It is not our fault when a home declines in price. All the FSBOs that sold themselves when the market was Red Hot in 2005 told us then that we couldn’t take credit for the price increase.
Is it any different now? Here is how I look at it. If a seller is motivated to sell by a certain date and we don’t actively tell them to reduce their price every week to sell by that date, we are doing them a disservice.
When they are up against the wall and strapped for time, they will reduce the price below market just to get the home sold.
Or, if they are unmotivated — but determined to get a certain price — they will keep the home on the market, then finally try to sell FSBO.
Some cheap buyer will make them a lowball offer and they will take it and net what they would have if they had been listed with you.
8. Tell them what you are doing to market and promote their home.
This will constantly re-affirm with them that you are trying to sell their home.
Send them copies of the ad whenever their home is advertised. This protects your reputation whenever someone at work tells them to fire you and hire their ‘’hotshot’’ friend who is a Realtor and has this supposedly ‘’great’’ track record.
9. Quote the statistics.
Say there are 1,650 homes on the market in your area. Last month, 125 homes sold in that same market.
If you look at those numbers and no other homes come on the market, that means you would have 13 months of homes on the market, right?
Let’s say 345 homes come on the market in the following month. What do you think that does for the value of your home when it has that much competition and that few buyers looking for a home?
10. Be on their side. All of us have our seller’s best interests at heart. Tell them that you don’t want to reduce the price, but the market is telling you that is what must be done.
Here is what you say when the seller tells you that you are just trying to reduce their price to get their home sold quickly so you can get paid:
“A home is only worth what a buyer is willing to pay. And all of the buyers are being subjected to your home because it is being advertised and all the other Realtors know about it. But so far, no buyer has been willing to pay $279,000. So it must be a problem with the price. Doesn’t that make sense?’’
Using the above methods, I am able to get unmotivated sellers to reduce their prices. I told the former seller I talked about all the reasons that he needed to sell his home.
He realistically was not very motivated to sell. I told him that he could sell today for $172,000 or in 6 months for $165,000. The logic was simple and that is why he took the price lower than what he really wanted.
Which Sellers Are Worth Listing?
There is nothing crazier than seeing another real estate agent list a house for $450,000 that comps out at $250,000. Agents get so desperate for business that they’ll take anything they can get.
The key to success in real estate is just like anything else. You have to select the good customers and get rid of the rest. Banks do this when they reject the bad borrowers and only lend to the ones most likely to pay.
Agents get so ‘’busy’’ chasing down unmotivated prospects and working with unmotivated seller listings and unmotivated buyers. They have no time for any profitable customers if they were able to find them.
Then, they wonder why they are going broke.
Here is the best way to determine whether or not to take a listing. Several of the most successful agents I have known use this method. Ask the seller questions to gauge their motivation.
Motivation is everything. Motivated sellers who are broke will want to overprice their homes in the beginning but will be realistic with the price when they have to move out of town for their job transfer.
Don’t take a listing just based on the price they want for the home. If they are in foreclosure, three months from losing the home, they are going to want every penny they can get because they need the money.
They will overprice in the beginning, but the foreclosure will force them to price the home right.
There are two main things to look for in a seller. Let’s quickly go through them below:
1. Motivation. Ask them where they are moving.
Then ask why they are moving. Then, ask what’s important to them about the move. It says in the Bible: ‘’You have not because you ask not.’’
And a lot of people believe that the universe will give you what you ask of it. Whatever you believe, if you ask sellers to gauge their motivation, they will tell you.
You will be amazed at what people tell you if you just ask them.
“We are moving to Omaha because I am being transferred there for a great job that is paying more money, and we’ll be closer to family.”
2. What’s important about the move?
“I would say that I can give my family a better life. I’ll make more money, we can buy a bigger house and Omaha has lower crime and safer schools.
“And Robin’s parent will be only two hours away in Suskebush. I’m really looking forward to the move, and I’m starting my job in 2 months.”
Now you know you have a motivated seller worth listing. Even if they want to list high in the beginning, you can call them every week and get the price down to a realistic one, then sell the home and collect a commission.
The current real estate market requires more work to sell our listings than the white hot market of 2005 to 2006. But, it’s easier to sell listings if we have a system in place.
Here's the system I recommend to keep your sellers happy and get prices reduced:
- First, call them every week on a Tuesday or Wednesday afternoon. By this time, you will have showing feedback from the weekend showings.
Tell them what happened with their home this week and if necessary, ask for a price reduction.
- Follow up on showings on Monday afternoon. If you can’t reach the Realtors, call them again Tuesday.
- Schedule a time to call all your sellers at the same time every week and treat it like an appointment. This time is actually more important than a listing or buyer appointment.
- Don’t skip calling them one week. People love consistency, and that is what you’re giving them.
- Ask if they know anyone buying or selling when you call them. If you are doing a good job, they will refer people to you. This will make your time calling them more productive and worthwhile.
If you follow these simple steps, getting price reductions — and closing deals — will be so much easier for you.