The National Association of Realtors (NAR) and local market statistics have confirmed an interesting trend… Homes that have price reductions take 3x longer to sell, and average an 86% list price to sales price ratio.
LONGER MARKET TIME = LESS MONEY IN THE SELLERS’ POCKET
Setting the price correctly in the beginning has become crucial.
It is critical that an agent prevent the seller from shortcutting the pricing process by jumping to a pricing decision, thereby making the biggest and most costly mistake a seller can make. Because most sellers are fixated on the price, they want to fast-forward to it and they expect the agent to tell them immediately what their house is worth.
Most sellers do not realize that pricing is not a number, but rather a STRATEGY.
They are not aware that there are numerous variables that affect the pricing strategy such as knowing how real estate agents work, understanding the market trends and valuing the process of “how buyers buy”.
This tendency to jump ahead to pricing is just human nature, so real estate professionals must acknowledge this tendency and work with their clients to stay on the path to accurate pricing. The agent’s job is to slow the seller down enough to get them to think this through and look at pricing from a different perspective.
Here’s an example. You purchase a new product that says “minimum assembly required”. You take it home and excitedly open the box and begin sorting the pieces across the floor. You skim the directions and see a diagram with various “A”, “B” and “C” labels, all interconnected. You think to yourself, “this looks pretty simple!” You eagerly start to put the pieces together and begin to see some progress as your new product comes together. At some point into the process, you start to realize that you have a problem. The pieces aren’t lining up like you envisioned, there are some extra pieces lying around, and you know that the overall product just isn’t right. And there it is – your well-intended enthusiasm led to shortcuts and now you’ve got a big problem.
So, what’s the point of that pricing strategy example?
Selecting a pricing strategy is similar to assembling a new product, but much less forgiving. Get it wrong and it can negatively impact the seller’s life forever. That’s why one of the agent’s most important job responsibilities is to help the seller select the best, most-effective pricing strategy so they get it right the first time.
This course has two components:
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Creating a Strategy
The first component to creating a strategy is reviewing the data: CMA, market trends and seller motivations.
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Implementing the Pricing Strategy Decisions
The second component provides you with the skills needed to help the seller make good pricing strategy decisions. We’ll discuss seller psychology to examine the ways that these decisions are made. By better understanding how the decision making process works, you’ll be able to anticipate your clients’ wants and needs, and you’ll be able to take that into careful consideration when creating your pricing strategy.