How to have the tricky ‘price reduction’ conversation
There’s no getting away from the fact that the market has shifted.
Unfortunately, market conditions don’t always match up with vendor expectations when it comes to their sale price. Bringing those expectations in line with the market can be a challenge, though you know it’s in their best interests to have realistic expectations from the outset.
It might be tempting to over-promise on price to land the listing, that’s an approach that can come back to bite you when it comes to finalising a successful sale.
Instead, here are some tips and scripts for that crucial price expectation conversation, whether it’s at listing time, or sale time.
1. Keep the market at the centre of the conversation
This is about making sure vendors remember the market conditions are the reason for a lower than expected offer, not you or your sales methods.
Keep them informed through the selling process about what is happening in the market generally, not just for their listing. It gives them context and a point of comparison.
Use your digital marketing campaign dashboard to demonstrate the level of engagement with their listing, and compare it to activity on other campaigns for similar listings. Work with your agency colleagues to demonstrate that everybody is facing similar challenges.
2. Manage expectations early
Talking about vendor price expectations should be a key part of your listing pitch, and this is the time to chat about current market conditions and what similar properties in the area are selling for.
Again, go to your listing pitch prepared with case studies from recent sales that demonstrate what is happening in the market and use those to support your case for what will be a good price in the current conditions.
If the market shifts again while the house is in market, or you are getting negative feedback from potential buyers on prices, keep them informed throughout the campaign, so any future price change won’t be too shocking.
3. Listen and compromise
If you and your vendor are disagreeing on price, make sure you listen to their reasoning, and put their arguments in the context of their situation. Do they need to sell quickly? Have they committed to another purchase? Are they prepared to wait until the price is right?
All of these things can change how you handle conversations around price. If the vendor price expectation is too high, don’t be afraid to quote them quite a lot lower than the amount you actually expect the property to sell for. Often you’ll find vendors will settle somewhere around what you expected, at a figure that is higher than your quote but lower than their original expectation. The idea is to sell them the middle ground that you can all agree on - including the buyers!
4. Inform your community
Another way to offset vendor buyer expectations is to play the long game. Use your personal brand campaigns on social media channels to keep your target audience up to date with market shifts in your local area.
Your brand ads can be optimised to reach a wide cohort of potential sellers in your area, so use those campaigns to keep buyers up to date on recent sales results, market shifts and the pros and cons of listing at different times.
Not only does that build trust with prospective clients, it helps ensure they are realistic about what price their property might attract in the current market - and why you are the right agent to help them get that price.
5. Focus on goals
In your listing pitch always ask your vendors what their goals are. For example, is it to get the most money possible? Is it to be sold by a certain date? Is it to clear a certain amount of margin once fees and costs are covered? Do they want to sell to a certain type of buyer?
Reminding them of these goals can help shift the vendor from focusing solely on the dollar amount. Talk to them about needing to shift different market dials at your disposal, like marketing, sales method and price so they meet their primary goal; which often will not be strictly price focused.
Scripts to try:
“If we don’t have an acceptable offer after this weekend’s open homes, let’s talk on Monday evening about what’s happening in the market? Does 5pm suit you?”
“I think we need to re-evaluate our approach to take into account the current market, and to make sure we are doing what we need to attract the right buyers.”
[pause for response]
“I’ve done some research on what’s been happening in the market since we listed. We have seen sales prices drop and activity slow down."
[pause for response]
“One way we can get ahead of that situation and appeal to buyers is to drop our asking price."
[pause for response]
“My suggestion is we look at a price reduction of about XX% to $AMOUNT. This will bring your property into line with the market, and will bring in more buyer interest.”
[If vendor pushes back]
“I understand. What price would you feel comfortable with?”
“I will keep doing everything I can to get you the best price for your home, but we do need to work with what the market is prepared to pay."
“I understand this might be disappointing and upsetting and, in the end, I will do whatever you direct me to do. If your primary goal is still to [INSERT GOAL], I believe the best way to achieve that is to sell your house at a price the market will support.”
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