The best time to “set-up” a price reduction is when you take the listing (you already knew that, right?).
But if for some reason you’ve taken an overpriced listing and need to get a reduction, you can use this simple process to correct the situation and save yourself months of carrying expenses.
This process is part of a face-to-face “price reduction meeting.” Top Agents use these meetings to establish trust with sellers, get price reductions with ease, and ultimately sell their listings faster.
I’ll give you the outline of how the price reduction meeting should go and the exact questions to ask your seller-clients during this important meeting…
4-Steps To A Successful Price Reduction Meeting…
Your price reduction meeting with sellers will be similar to your original listing presentation, except you now have accurate, historical information about the seller’s home.
STEP 1: Present an Updated Market Analysis
Before the price reduction meeting, you’ll need to prepare an analysis similar to your original CMA (or “Maximum Home Value Audit™”). During the meeting, compare your seller’s home with all of the other listings, pendings, and sales in the area.
Analyze other statistics such as average time on the market, price ranges, list price to sales price reduction percentage, and the percentage or number of listed homes sold during the same period as the seller’s listing. After presenting the market analysis, ask your clients 2 questions:
Question 1. Do You Have Any Questions Regarding The Market In Your Area? You’re trying to confirm that they agree with your market analysis. If they have questions, answer them directly, then ask:
Question 2. Do You Agree That The Home is Priced Above The Market At This Time? You’re not asking them to lower their price here. You’re asking them to confirm that their home is overpriced. You’ll be asking them to reduce price shortly. Once they see for themselves the home is overpriced, go to the next step…
STEP 2: Present Your Completed List of Marketing Tasks
Go through your original marketing plan, and discuss every action you’ve taken to market their home. Explain the impact or exposure of each action on generating prospective buyers.
You can also explain the historic impact each task has had on selling other homes you’ve listed, or homes sold in the area. Your objective is to reinforce the seller’s confidence in your ability to market their home. At this point you want to ask another 2 questions:
Question 3. Do You Feel That Your Home Is Being Marketed Properly Up To This Point? If they say “yes,” go on to the next section. If they say “no,” you need to ask this question:
Question 4. What Areas Do You Feel Need Improvement In Marketing Your Home? You want to ascertain their expectations about your marketing activities at this point.
Some sellers value open houses, others want to see more agent showings — everyone makes their own expectations, logical or not. Listen carefully here. You can adjust your marketing plan to better fit their expectations if it’s warranted. Nevertheless, the sale issue will always come back to pricing the home — the seller’s responsibility.
After the sellers finish sharing their thoughts on the marketing of their home you can move on to the feedback you’ve received…
STEP 3: Present Feedback and Areas For Improvement
Take out the comments you have from touring agents, showings, and open houses. Review the comments relating to price and showing condition of the home.
These comments are very important because they are honest, third-party opinions about their home. Sellers may get a little upset at this point, but it’s important they hear feedback that will better motivate them to sell their home. At this point, you want to ask the following question:
Question 5. Do You Agree With The Comments From These People? You want to make sure they acknowledge the comments made about their home.
If some of the comments made require physical improvements to the home, you need to open that discussion and start making plans for improvements. But, don’t get the issue confused — there’s still a price issue to be discussed…
STEP 4: Ask For The Price Reduction
The first thing you want to tell sellers at this point is you’re doing everything possible to promote the home, as shown from the activity and marketing plan. Second, tell them that your efforts will be fruitless unless “we” adjust the price to get closer to buyers expectations. Then tell them the following:
Mr. and Mrs. seller, your property will remain unsold as long as we continue to price it at $_________. Pretty soon other agents will cross it off their show list because they know it’s priced too high, and they won’t want to waste their time. Before this happens, we need to reduce the price. I recommend we reduce the price about ___% to be more in line with the market.
IMPORTANT TIP: Notice I used a percentage, not a dollar figure? Percentages are more relevant and better received when making price adjustments. Clients will probably want to know how much that means in dollars, and you should tell them, but present it first as a percentage.
Then ask the following question:
Question 6. Is This Price Acceptable to You? They’ll probably say “no,” and give you a price that’s a small reduction from their current price. If they do, say the following:
The formula here is really quite simple: The greater your price adjustment, the faster your home will sell (and for the most money possible). The lesser your adjustment, the longer it will sit on the market.
Then, remind them of their motivation: Have you finalized your plans to move yet? (or) Have you made any decisions on your next home? (or) When do you have to qualify for your next home, and is your loan approval dependent on selling this home?
At this point, they’ll either say “OK'” or they’ll have common objections. Remember, objections are just unanswered questions revisited. Handle each objection keeping in mind that seller’s have many emotional attachments to their homes, which can compromise their rationality.
And one final thing…don’t forget to complete and sign the agreements for the price adjustment AHEAD OF TIME. Keep the “price” field empty, but complete the rest of the agreement. You’d be surprised how many agents forget at the end of this long (but now much easier!) process.