How to talk to your sellers about the 2008 market

By Alex A Kecskes

If you’re a real estate agent with less than five years in the business, chances are that you’ve only known an “up” market. You’ve never had to sell properties in a buyer’s market or talk to sellers about price reductions. Today, with inventories stacking up faster than pancakes at IHOP and qualified buyers scarcer than bird feathers in a cuckoo clock, you’ll need some tactics and strategies to help you bring sellers’ expectations into line with market realities, to establish the correct price on a listing, and, if necessary, to gracefully walk away from unrealistic sellers.

Beyond the “Honeymoon”

In a buyer’s market—where a limited number of buyers are looking for a home amid a swelling inventory—if a home hasn’t sold in the first 21 days, the seller’s “honeymoon” is over. “As a rule, if after the first 21 days, the seller had many showings, but no offers, the price is probably within 5 percent of market,” says Richard Daskam, broker associate/partner at Keller Williams Realty. “But, if after 21 days, there are few or no lookers, the price is probably at least 10 percent or more over market,” adds Daskam. Most buyers will offer 5 percent under the asking price without offending the seller, but very few will offer 10 percent or more under the asking price. Buyers and their agents will simply refuse to look at a property that’s 10 percent or more overpriced.

Adjusting Expectations

Prime sellers for a price reduction the day they list. Explain that pricing is an art, not a science. Remind them that your suggested price is an opinion, and that only serious buyers who are actively looking will tell them if the price is right. “During the first 21 days, and throughout the listing period, keep the seller informed,” says Daskam. “Give them copies of news articles about the market, as well as all your marketing materials, so they see how hard you’re working to sell their home.” Daskam recommends performing a new comparative market analysis (CMA) every 7 to 10 days. He also suggests agents call the seller immediately when a new listing comes on around the corner, or when a local property goes into escrow or closes escrow. “After 21 days, if it’s not sold, the seller will likely come to you to give you a new, lower price, because the seller will know they’ve overpriced,” says Daskam.

Having “the Talk”

If you have to ask for a price adjustment, be prepared with information, honesty, and a clear picture of the market. Your goal is to get the price you want, without a fight or hard feelings. Daskam recommends agents bring the following seven tools to a face-to-face meeting with the seller:

1. Your original CMA: Show them where and why you priced their house originally.

2. Show the activity, price reductions, expired listings, etc., from the first CMA.

3. Give them a new CMA and ask them to propose a price, given the new information.

4. Show them all the marketing you’ve done to date, that you’ve gone the “extra mile” to find a buyer for their home.

5. One or two key articles about today’s market. Go over articles about price declines, interest rate increases, job losses, etc., that are affecting the real estate market in your area.

6. Give them your new suggested price and justify it in light of the updated news about the market.

7. Show them your marketing plan for the next 30 days.

Unrealistic Sellers

Unrealistic sellers are a fact of life. Daskam forces them to zero in on the core of the issue, asking, “Are you willing to do anything necessary to get your home sold?” If the answer is no, Daskam suggests walking away. If the answer is yes, he adds, “I may ask for two price reductions to eventually take the property down 2 percent to 3 percent in value.” The key is to be prepared. “Before I walk through the door, I have a specific price in mind. It’s a fine balance, a one-on-one, back and forth with clients.”

Try the “Offer Evaluator”

ZipRealty offers a tool, called the Offer Evaluator (www.ziprealty.com/resource_

center/new_features.jsp), to help sellers price their home. While this tool was designed for buyers to test their offers, it is being used by sellers and buyers alike. “It gives sellers and agents a snapshot of what’s happening in their market,” says Leslie Tyler, ZipRealty’s VP of marketing. Sellers see for themselves that most low offers were not accepted, providing a barometer of price acceptance in their neighborhood. ZipRealty also recently launched Seller Dashboard, which shows listing activity.

Alex A. Kecskes is a freelance real estate writer.