Every real estate professionals knows that home owners overvalue their homes. They get so emotionally attached to it that it’s almost inevitable they’ll think this way. So it’s your job to tell them the reality of what their home is actually worth.
A very common mistake real estate professionals make at listing presentations is telling the home owner what they want to hear and overvaluing the home. The rep thinks, “Why not just go with what they believe is true? The important thing is getting the listing. I can always lower the price afterward.”
This is a common way of winning the listing but losing the sale. It’s the same approach retail stores use when pricing an item. When a retail store first gets an item, they put the highest price they think they can get on the tag. “If people need to have it now and not later, let them pay a premium.” But when those items fail to sell, the price starts falling, sometimes precipitously, especially in high margin businesses like clothing. Not long ago I saw an article of women’s clothing at a ritzy clothing store priced at $395. That was the first price on the sticker. Not long after I found this exact item at a discount clothing store. The item had been marked down several times and I bought it for $39.95!
Don’t use the retail method for pricing your would-be listings. The main reason is if you don’t prove their home’s true market value to these sellers in your listing presentation, they won’t think their home’s price should be lowered, and so you’ll have a difficult time getting them to ever lower the price. If you ask them to lower the price they’ll probably just think you’re lazy or not the great sales pro you said you were. Besides, you are supposed to be the real estate expert, and so they believed you were telling them the truth and telling them their home’s real value. By pricing too high at the beginning you are almost sure to sour the relationship (and the sale) eventually.
Another problem with the retail pricing method is it’s a slippery slope. You send a message of weakness, even desperation, to buyers once you lower the price. They will often think if you lower it once, you’ll probably do it again, so why not just wait until they lower it again? Any negotiations are sure to go less smoothly than if the home’s true market value was used from the start.
So always tell home owners what they don’t want to hear: what they’re home is really worth. Prove it to them with the various parts of your listing presentation package. You’ll then be selling at a price you can stand by. In the end, you’ll get a higher price for the home than if you use the retail approach.
Learn about the best ways of proving a home’s value to sellers at listing presentations by taking my course Advanced Listing In A High Tech World. This course has been approved by the Registrar, REBBA 2002 to qualify for 12 credits.
