Use the bucket theory.
Describe the market as a bucket (Use an actual bucket or at least a diagram). The home prices are still not at the bottom of the bucket but heading that way and probably close to 1% per month (look at your local stats for accuracy). At some point, probably in the next 6-9 mths, the prices will hit bottom and stay there for awhile. Probably for the next 2 years. Then will go up the other side of that bucket, reaching what they are asking for now probably in another 2-3 years later. You are looking at 4-5 years from now.
The question the seller has to ask themselves do they really want to sell or do they want to continue to chase the market while it continues to recede, wait until they pric comes up to where they are now (1-3 years) or be done with it, move on, and take advantage of buying a home at a very favorable price.
You are the person they hired, be firm with them, you are the expert. You may also want to get your Broker involved to explain the same to them. The reason being, and because being a broker myself for years, have experienced it and been successful, is that you have been married to these clients for months. You do not want to hurt their feelings and they are probably thinking that you just want to lower it to make a quick buck. Using a third party (and by the way, do it in your office, it makes it a business decision for the seller), gives it another perspective, another voice, and a managers experience, to say the same thing, but in a direct way.
It works 90% of the time. And it has nothing to do with your experience or professionalism. It is validation from YOUR MANAGER.
If you cannot get that help from your manager, get another agent in the office to help (not as effective) and if there is no-one in that office that can assist - change companies and get a non-competing manager that can. An effective manager can assit you in making 5-10% more deals per year.
Good luck and let me know your thoughts.
Jack Schlenk, Certified Appraiser, Real Estate Broker, Chicago, IL
Trulia and other sites can provide statistics as to how many views a home is getting on their site. If the home is generating decent numbers and no viewings, that is an indicator that "something" is wrong. Check the photos, check the description, bring in a home stager for a consultation, and yes, check the pricing. Find the reason it is not being shown and attack that. Too often agents do not know any other way to create more traffic but lower the price. This discourages the seller and the agent alike. But finding a way to create a buzz around a home can bring high results!
If everything else looks to be in order but the price, and the seller isn't budging on the price, determine if they can financially afford to budge on the price. Maybe the reason is money.
Finally, if the finances is not the problem, feature the home on a few real estate sites. This will send hits through the roof. (On 1 site, I recently had over 5,000 hits on one property, in one week, that was previously getting 30 hits a week). Trust me, if you have those numbers and few viewings, lowball offers, or no interest at all, it is strong proof the owner is asking too much! If that doesn't change their opinion, I'd drop them or simply not persue renewing the listing at expiration. Jay was correct in a stating our efforts, and resources, can be better utilized with properties that have a higher likelihood of selling, yielding a better return for us! Hope this helps!
If there is traffic; instead of lowering the price, I have found that increasing the BA's commission works wonders. If the price point, house, owners expectations are out of touch with reality, then I don't list the house, the ROI stinks, and I can better use my time marketing a house that will actually sell, with owners who have realistic expectations.
I put the word strategy in quotes, because it kind of puts a negative spin on it. When googled, the first definition that comes up (meaning the most popular) is: "a scheme: an elaborate and systematic plan of action". I didnt want to give the impression that I would "scheme my seller clients". I feel that they just need to be educated, so that is the term I chose to use.
I dont use a "strategy". I just educate them on competing inventory, show them properties that have SOLD, and explain mortgage programs that would be available to their audience. I also have a sophisticated feedback tracking system, that they have access to. Once they are educated, they usually see the writing on the wall.
explain to the home owner that just like he/she wants a good value when he/she buys good and servicer, so do home buyers want a good value. a buyer determines value by comparing properties. if your customer's property is priced above the competition it will not be considered a good value, and it will not receive further consideration.
losures and Short Sales. I really have a heart to heart before listing a property as to the real market. Regular sellers will need to be willing to offer the same discounts as the foreclosure banks in order to compete. They are probably not too happy about it but it is reality.
Another strategy is to show them how many people have checked out their properties for example on Realtor.com or other website where you can measure the activity on a weekly basis. If people are looking and they still don't have any offer - hence price is probably too high.
I find that a lot of Realtors are agreeing to list homes at price points where they are unlikely to sell. Once you set the ceiling, it is a lot harder to bring the price down to market.
I'd put it like this: "There's a one-day price, a one-week price, a one-month price, a one-year price, and a one-decade price. Where do you want your price to be?"
There are houses in my market which have an "infinite time" price. That is, not inthe forseeable future.
After all, the prices of 2006 were part of a muti-trillion dollar, worldwide Ponzi scheme and not real, anyway.
One of the things that may be necessary is a complete evaluation of the market. Tracking absorption rate (new listings, current inventory against sales) by price range is a great visual for sellers. If you have a 25- month supply of inventory in the price point they are current ly in and there is a 6 month supply in the price point right below them, it could be compelling enough for them to make the reduction. Also, if you have some type of email subscription service that sends new listings, and reduced listings in your market, it may be more real to them to see that their comps are moving below them. This is a easy way to deliver the hard news that they need to reduce. I would also follow the original comps you gave them, as they most likely, have been reduced. Hope this helps. Melissa Riley
I have to agree with Jessica, Gary Kellers new book SHIFT "How Top Real Estate Agents Tackle Tough Timesâ€ has a lot of useful information. I saw him recently at a seminar in Waltham, Massachusetts and I must say it was worth taking the day off.
Anytime you want to borrow that book, please call or email me. Hope you and Colleen are doing great!
Keller Williams Realty
Contact me anytime.
Keller Williams, Conroe, TX
In these cases, Realtor need to discuss alternatives with sellers. It is now sometimes possible for them to re-negotiate their loan down to a very low percentage rate ( I have heard as low as 3%) and possible interest only payments for a number of years. This is helpful in case they really do want to stay in the house and could do so if the payment was reasonable. Granted, this is not going to be profitable for the Realtor -- but be assured that "sellers" we have worked with are someday going to be future customers who know that we will leave no stone unturned to assist them with their best interests as the priority.
Another alternative we have found effective for sellers who have been transferred to another area or who purchased during pre-construction in hopes of flipping for a profit, is to lease the home, often with an option to purchase. The typical potential "buyer" needs to lease for a while until they sell another home in a distant area. Other tenants may become first time home buyers when they save enough money to accumulate a down payment. As Realtors, we can also help these first time home buyers with information about the new government program that offers up to $7500 tax credit to help them buy a home. This offer will expire next summer, however, so having this information now helps them to set a goal to be a buyer this spring or early summer 2009.
Hope these suggestions generate some other ideas for Realtors to share about helping sellers achieve their goals.
Not sure why Melissa put the word strategy in quotes, since a plan to succeed is a strategy, but otherwise I am in general agreement with her. If you still have the original comps and the price history, compare what has happened to your listing. Your comment "again" sounds like they have already done a price change...was it enough? If it wasn't a deep enough drop, they could be dropping their price but still be staying above the market value.
If you believe the property is priced within the range for sale, not just in the range with other properties that aren't selling, maybe try some buyer incentives. If the property is priced at $539,000 or less, a qualified buyer with only 3% down can get an FHA loan. Try putting together a plan with a trusted mortgage agent who is approved to do FHA loans...or pay closing costs.
At this time of year a seller really needs to decide if they really want to sell, and if so they need to do what needs to be done.
Best of luck to you!