By James Shaw
While the economy is thriving, unemployment is down, and it’s a seller’s market in many areas of the country, we know that history repeats itself – and markets shift. As I teach across the U.S., I speak to a lot of agents who are nervous about the changing market, especially if they haven’t been through a shift before. But I’m here to tell you: a shift is a gift.
In 2009, I was a team leader in Cary, North Carolina. This was the heart of the shift for that area, and we went from 110 to 89 agents in two months. Gary Keller and Jay Papasan released SHIFT in November, and we latched onto it. At the same time, we offered agent coaching through BOLD, and consequently had the best fourth quarter we’d ever had. The office went from #12 to #1 in the local area. In Cary, it went from fourth to first. All of that happened during the shift. It’s a massive opportunity if you master the right skills – pricing being one of them.
In a shifting market, pricing correctly is crucial.
If you overprice while values are falling, the house sits on the market until you make a price reduction. But you’re still ahead of the market while it’s declining, so you end up selling it for much less than you would have had you priced it right from the beginning.
Don’t make the mistake of overpricing your client’s home. Put the tips below to work as you refine your pricing skills:
Focus on active listings.
Dianna Kokoszka, CEO of KW MAPS Coaching, recommends that you should only take focus on active listings instead of pendings, solds, or expireds. Why? In a shifted market, the competition is between your listing and the others like it on market, so look at what you’re competing against instead of who’s already finished or is just entering the game. If the market is declining, it doesn’t matter what something sold for last month – it’s not worth that anymore. Do your comps with actives, and then price so you’re in the market … not ahead of it.
Know your seller’s motivation.
This is answered in a comprehensive pre-listing conversation. Nobody can say no to their own goal. When you understand the seller’s motivation and how it helps them accomplish their goals, later when they want to price too high, you can recall their motivation to influence your pricing conversations.
Internalize your scripts and objection-handlers.
A shifted market is a skills-based market, so agents MUST spend time role-playing, practicing scripts, rebutting objections, and working with a KW MAPS Coach to support them. This is the number one area where most agents struggle during pricing conversations. You give in to what the client wants when you know better. You cave in and overprice it. And it sits on the market and sells for less than it would have had you priced it lower from the beginning.
Kelle Market Snaps is incredibly useful. The feature allows users to pull hyperlocal market reports with one voice or text command to Kelle: KW’s award-winning, AI-powered virtual assistant. With one voice command into Kelle, you can pull up all the active listings in the area. It’s truly remarkable the capability you have in your pocket or purse. Even more, KWCommand – KW’s innovative new operating system – will compile all the data you need so you can share listing information and pricing strategies with your seller as well.
With KW’s technology, every single tool that an agent needs, whether in a shift or not, is in their hands to support them. Nobody else has that.
Recognize that pricing is a strategic question, not a value question.
There’s a BOLD law that says that logic makes you think, and emotions make you act. Here’s an example: Your seller has to be in Chicago in a couple months. There are 20 houses for sale in their area and two homes are selling per month. Your research says to price the house in the bottom four so they can reach their goal to be in Chicago on time. But, your client doesn’t want to be at the bottom; they want to hold out for more money. You’re strategic. You ask if they want to sell the house and get to Chicago by their goal date, or if they want to leave part of the family behind and commute back and forth for a year or two while they wait for the house to sell. Paint a visual for them of what it’d be like to be a long-distance landlord who rents the house out for a few years. Walk them through the statistics, facts, and logic, but get them to act using their own motivation. It works every time.
For a deeper dive into pricing strategies, watch James Shaw present below.
Shift: Price Ahead of the Market
Pricing is vitally important, especially in a shifting market. Use pricing strategies, and educate your sellers and yourself to attract qualified buyers. Learn how to get ready, get set, and go to get the right price for sellers.