"We need to lower the price...": Verbiage for Price Reductions.

   

(Verbiage for this scenario is at the end of this post in bold if you want to start with that…feel free : )

Ideally, this is why we as real estate agents should stick to our guns about never listing a home above what we are comfortable with...but it happens.

I get it.

You agreed to list a clients home because they agreed they would lower the price if offers were coming in to low.

The offers are coming in.

They are well under the asking price.

And traffic has slowed down significantly.

It is time to have the conversation that none of us look forward to with out homeowner.

"We need to lower the asking price"

As real estate agents we know that if a home isn't bringing in any ballpark offers and we are not getting many inquiries…

It is the asking price.

It is one of those "matter of fact" situations that we are able to see very objectively because we know how the market moves.

But a "matter of fact" for us in no way means that it feels that way for the homeowner.

The homeowner feels that the price of the home and the value for a buyer are essentially the same thing.

They feel that way because they paid for their home and have experienced its value on a deeply personal basis.

As the personal value grew through their personal attachment, the asking price that makes sense to them grew also.

Unfortunately, the price they want and the face value to an unattached stranger are not going to translate if the asking price is outside of comparative margins.

We know that value is a story we have to build through our interaction with potential buyers.

So to get to story time, we have to convince the homeowner to let go of the current price.

We need buyers to be there to tell the story to.

How To: Getting price disconnected from personal value

We have to disconnect price and value as a starting point when approaching our homeowner.

By doing that, we are separating emotional attachment from what needs to be objective.

We have to make it clear that reducing the price is not devaluing their home.

First we have to know why the homeowner came up with the asking price for their home.

If we know that it makes building your incentives much easier.

(We will use a standard situation for our scenario)

This homeowner put in different flooring for every bathroom, they put in the highest-grade granite, and the appliances are only two years old and stainless.

They are asking $375,000 for the home and homes with comparable upgrades have sold recently as last week for for 325,000.  The homeowners want to move quickly because they are building their next home and need to sell prior to moving forward.  They are excited about the new home, but love this current home they are trying to sell.

First of all realize what you are negotiation for.  You are not trying to sell a $325,000 idea to the homeowner you need to sell a $40,000 idea to them.  $40k off the asking price gets you down to $335,000 and you feel you can work with that. But try not to talk about that figure upfront.

Using $40k as a negotiating number rather than the total value of the home gets you away from putting a “lower total price tag” on the home while you are trying to explain what is in it for them.

THE CONVERSATION: VERBIAGE

Homeowner, Mr. Smith: “I really do not want to lower the price. You know we designed and put in all these upgrades and they cost a fortune. Cant you up your marketing tactics instead of me lowering the price. I need you to do something so my wife and I can finish our new home.”

You(agent) “The upgrades you put in this home are beyond beautiful.  In fact… when we met I could not even imagine how the next home will look better than this home.  Then I say the plans for the new house. I realized that it wasn’t just the upgrades that made this home beautiful, it was you and your wife having the vision for the interior future of this house…and now that I know your plans for the next home a am even more excited about it.  I know that when people come and see this house they will appreciate how beautiful it is.  The lack of interest is not because of the house. The home is stunning. Unfortunately comparative market value dictates how quickly a home will move not beauty.  With upgrades, the money you put in does help the home value but it does not add as much as I would like to tell you it does.  The market just does not work that way.  I know you need me to do something to get you into the home you are building.  This is me doing something.  Something I do not enjoy but I know is in your best interest and I promised to work in your best interest. If we reduce the home by $40,000 we will attract a swarm of buyers.  What we need is more exposure and marketing cannot buy that if the price is not enticing as well.  Let me reduce it so I can flood the place with interested buyers.  Let me do my job Mr. Smith…If I can get people to the door I can show them the value of this home because I am not just selling the home for you… I appreciate it.”