Mastermind for November 23rd. Stale Listings
Well, another awesome Mastermind session yesterday. It was great to have some agents from other offices sit in as well. Mastermind is a pretty casual event with no agenda in place. Agents are encouraged to bring in their own topics for discussion. Yesterday however I got the ball rolling with a question that was posed to me by an agent from another company who reads my blog. The question was; How do you manage stale listings?
First of all, I think it is important to define ‘stale’. Our Mastermind group felt that there where two things that helped us determine if a property was stale. One was the time on the market, which of course varies across country and the other was Activity. For instance, a house that has been on the market for 60 days but is getting 2 showings a day may not be stale because it is generating lots of attention, but a house on the market for two weeks with no showings is a different matter.
Lets remember the cardinal rule of real estate. Everything sells if it is priced right. Getting to the right price is the tough part. Theoretically, when agents prices a home they use a competitive market analysis ( I like competitive rather than comparative because it’s tough to compare houses since there are rarely two the same). That is, looking at what has sold, is for sale or unsold. Usually there is some price adjustments to factor in things like the number of bathrooms or parking. Those adjustments are based on our experiences being in the market. In some ways you could say it is a gut feel.
It’s easy to blame a stale listing on another problem, and in this week’s Mastermind, agents brought up things like view, house style, age of the home, choice of ugrades, or being in a bad neighbourhood. But the reality is, that for every problem, there is a pricing solution. At the core, the agent needs to factor in those issues, build a case for the price, and relay that value to the potential buyer. What we are up against is the Realtor.ca addiction. It is a common ailment. Real estate has been the topic de jour for 10 years or more, and as a result, sellers are convinced they know as much, or even more, than local realtors. So what tools can we launch to get that house sold? Here are some thoughts.
1. If the homeowner has a price in their head that doesn’t jive with your research, ask him to show you his research. Let’s get right to the bottom of the price differential.
2. Set expectations better. Have an understanding for the average days on the market in your area. That is your baseline for pricing.
3. Explain the sales cycle to the seller. People are more keen to buy a house early on, and it is in the early going where the seller has the power. As the listing ages, the power transfers to the buyer. That’s when all the bargain hunters come out to play.
4. Report back to the seller regularly. How you manage your client is critical. That may mean daily phone or email updates and should contain feedback from other agents. (note to agents; feedback works when everyone participates so make the effort to respond to one another).
The pricing pyramid simply shows that being 20%under fair market value creates the most interest in a home while 20% above creates virtually zero interest. Obviously, the strategy here is to price a home in the zone that will generate traffic. As you can see, you get nearly twice as much interest in a home when you price it 5% below fair market value as opposed to 5% above, and you get three times as much traffic when it is priced 10% below versus 10% above.
6. If the client is determined to list at his price, agree on a time where the price gets adjusted according to your CMA. Most reasonable sellers will agree with your research in the end.
7. Outline your efforts to sell the house. Sellers will always use the excuse that you didn’t do enough to get them their price.
8. Jetison the deadwood quickly. Lets face it, there are some listings that will drag you down with their negativity. Don’t be afraid to say adios to stubborn sellers. Remember, it’s your reputation.
Naturally, the moment I hit the publish button a thought occured to me. Some houses just take longer to sell than other houses. In Toronto, for instance, a very well renovated semi-detached house, in a good area, priced in the low $600k’s will sell much faster than the $3M house in North Toronto. That is just a fact of life. The pool of people gets smaller as the price goes up. Just another thing to communicate to your seller.
Remember, You will always win the pricing battle if you demonstrate a solid understanding for both market conditions and area experience.
Have a safe and happy week.