To real estate agents, it feels like the market shifted overnight, so imagine what prospective sellers are thinking! They saw neighbors received 10 offers on their house in one day, and a sale for $50,000 over asking price. Naturally, they want the same, right?
So, how do you handle these situations at the listing presentation? RealTrends spoke with some experts to discuss what they’re doing to set seller expectations.
“The biggest challenge right now is helping sellers understand the current market,” says Ron Wynn, a Compass agent in California. “It’s challenging because in this transition, we have people talking but not listening. Sellers and buyers are in denial, and agents are just taking a position, but California is a big state and agents must understand their local communities so they can be very specific in their recommendations.”
“I’ve been teaching my agents several things regarding managing seller’s expectations as this market shifts,” says Gail B. Ailor, principal broker of Fathom Realty in Virginia.
Here are some strategies to manage seller expectations.
Education is key
According to Wynn, “Buyers are being led to believe, through the national media, that prices may soften 15% to 20% in the next year. Who wants to pay a price today thinking that in six months to a year, the property will be worth the same or less?”
So, education is vital. “I’m doing a lot to educate people without obligation. My tagline even says, ‘Ron Wynn: I care about you even when you’re not selling.'” He notes that he becomes the source of information about the local market, analyzing data and putting buyers and sellers on track to truly understand the reality of their market. After all, he says, real estate is local, so what the national media talks about may not even be relevant in your area.
Alexis Bolin, a 44-year real estate veteran who runs The Bolin Team of Keller Williams Gulf Coast in Florida, agrees and focuses on authentic and honest conversations with sellers. “I explain to the seller that the market of six months ago is over, and that the market sets the price, not me.”
Amanda Zachman, founder and executive director of MV Realty in Florida, says, “I advise [sellers] to pay more attention to the competition than the comps. In a rapidly changing market, comps quickly become outdated. Six months ago, people were overpaying for homes; it was a seller’s market, so comps are not quite as useful as they used to be. I recommend going beyond comps by comparing your home to a home currently on the market, or — even better — under contract.”
She also shows sellers the competition. “We tour homes on the market that are listed at a price within 5% of the seller’s target — 5% above and below. I suggest that my clients bring along a friend who’s willing to be honest with them. They should ask which home the friend would buy if the decision were between my client’s home and the home they’re touring,” says Zachman.
Determine motivation
When a seller comes to Wynn, he asks strategic questions to determine the motivation of the seller. Because, says Bolin, “Sellers all went the same school. They all tell you that they are not in a hurry to sell, so they want to price it higher and give it time.” But, that’s not always true.
And, pricing the home too high will run the risk of selling the home for less than they could have if they priced it right on day one. “I always ask, ‘How committed are you to selling if you don’t get the exact price you want? Will you take the home off the market? Will you end up having me lease the home?'” says Wynn. “If they tell me they would likely take it off the market, I have to make a business decision and decide whether or not I want that listing.”
The power of appropriate pricing on day one
“I’ve been in communication with Bright MLS trying to get them to develop a tool so that when an agent is inputting a new listing they can move a “pricing bar” from say $449,900 to $450,000 to see how many registered prospects yield at the two different price points. This would be a way to guide sellers about the impact of pricing on their reach to consumers,” says Ailor.
Realtor Property Resource already has this tool, and it’s very useful in helping sellers understand the current market, not the one that happened six months ago.
“Agents and sellers need to understand consumer online search behavior to price the home well. Does a buyer really start their search at $449,900 when they’re seeking a $450,000 home? Or, when priced at $450,000 doesn’t the seller want all the eyeballs looking up to $450,000, plus all the eyeballs starting at $450,000?
Market creatively
In a seller’s market, marketing takes a back seat because homes sell so quickly. But, today’s market requires agents to be more creative in their marketing, according to Ailor. She recommends great photography and MLS listing remark keywords that resonate in your hyperlocal market.
” Also, instead of choosing the Coming Soon status in MLS — a tactic frequently used in the hot seller’s market to produce a double-side sale for the listing agent — make the listing active immediately so that it syndicates to all online sites and gets immediate exposure to the broadest pool of prospects,” says Ailor.
Share the stats
Ailor, Wynn and Bolin also use data and statistics to back up current market pricing trends. “An agent can export a CMA to a spreadsheet then add days on market and the listing-price to selling-price ratio and comments. This will illuminate the detailed differences between comparable sold listings for the seller.
The listing agent can also contact the buyer’s agent on pending listings to obtain sales price and concession info, because the listing agent won’t usually share that before the sale closes, but the buyer’s agent will,” she adds. “Days on market can often show how the more days on the market; the lower the selling price is in relation to the listing price. That’s all the more reason to price appropriately, or even underprice, from the beginning.”
Wynn studies his local market so he understands the nuances of sales and prices in individual neighborhoods and communities so he can back up his assumptions with real data to help manage seller expectations.
Bolin also researches data showing the days on the market for the particular neighborhood the prospective seller has a home. “Does it appear to be going up or down? What the list to sale price ratio? I always ask permission to lay it on them. But, many agents are afraid to do that, and we’re doing sellers a disservice.”
She says, “Don’t be afraid to say, ‘This is the market today. I’m sorry last year might have been a real good time for you to sell, but you chose to sell this year, and this year the market has changed. I say, ‘I can tell you the truth, or I can tell you what you want to hear. What would you like me to do?’ They always tell me they want to hear the truth.”
Managing seller expectations in a quickly shifting market doesn’t need to be complicated or fraught with stress. Be honest, back up your information with market statistics and don’t be reluctant to show and tell sellers the consequences of a listing price that’s not supported by the market.
