Negotiating Price on Your Listings

Last week we had Stacey Anfindsen, from the TARR Report, present to our office during our meeting.  When reading through the 2011 Fourth Quarter and Year End Durham County Market Summary, one paragraph that stood out to me was "what happens when a house is price correctly at initial list."  It reads:

Good things. When final list price is equal to original list price, the average days on market for closings during the quarter was 59 days and the house sold for 96% of list. When final list price is lower than original list, there is a days on market penalty. These houses sold in an average of 178 days and for an average of 84% of original list.

This clearly demonstrates the importance of pricing a home correctly.  You will have both a time and financial penalty for incorrectly pricing a home.  I do not feel that agents have a hard time pricing a home, I feel they have a hard time handling objections to pricing from a seller.  So today I want to discuss a few core concepts to help you empower the seller to make an informed decision  when choosing the appropriate list price for the home based on information from the marketplace.

1. Position yourself as the messenger from the marketplace, not the message.  Use data from the MLS system, programs like the TARR Report and your CMA program to create the message.  Use data to support the message.
2. Involve the seller in the pricing process to educate them about market conditions while giving them ownership of the results. 
3. Determine a price at which the house is the most competitive with other listings in the market place.
4. Establish with the seller the direct correlation between "Price" and the length of "Time" a property is on the market.  It is imperative the seller understands time on market is directly influenced by price.
5. Do not take their objections personally.  Simply put, and objection is just a request for more information.  Use this as an opportunity to get them the information they are looking for.
6. Look for patterns in their objections.  There are a handful of objections you hear on a regular basis.  Identify these and have answers ready for them. 
7. Answer the objections before they are asked.  If you know that you repeatedly get an objections during a listing presentation, why wait?  For example, agents report that they are frequently asked by sellers about the relationship between market value of their home and tax value of their home. Instead of waiting for them to ask (or worse them wondering about it but not asking) address the issue in the presentation.

These are just a few thoughts that will help you better deal with your sellers when negotiating a list price.  Good luck!

Brandon Penny

bpenny@fmrealty.com

http://www.facebook.com/fonvillemoriseydurham

(919) 402-1201