“Is it your price or their price?”
Every experienced REALTOR® has heard this question and knows precisely what it means, “Is this the price you recommended to your clients?
Or, the one they insisted on, despite the evidence that clearly shows it makes no sense?”
As a general rule, EVERYONE on the planet believes their home is worth more than it is. There are several reasons for this:
- In the owner’s eyes, their home was the best one available within their budget and within their search criteria, at the time when they purchased it.
- Buyers subconsciously justify the price they paid, and tend to believe they got a “good deal.”
- Owners tend to focus on the best features of their property, either ignoring or justifying negative elements, “Oh, the sound of the train is quite soothing once you get used to it!”
- For competing properties, they tend to do the opposite; focusing on the worst elements and ignoring the best features.
Having an emotional connection to your own home and believing it’s worth more than it is, is a perfectly natural human tendency. I’m no exception. When I sell my house, I will undoubtedly ask for an opinion on the price of another trusted agent.
I doubt very much that I’ll be happy about it!
But a skilled REALTOR® is trained to look at your home through the eyes of current potential buyers and from a completely unbiased perspective.
Accepting a listing at “their” price almost always means one of the following scenarios occurred, listed in order of the most likely to the least likely.
- The REALTOR® is unskilled and doesn’t know how to price a home accurately. This is WAY more common than what the public realizes because let’s face it; accurate pricing is BY FAR the most challenging part of being a REALTOR®.
- The REALTOR® is afraid to lose the listing if they push too hard on the price, so they acquiesce to the sellers, with the idea that “I can always work on reducing the price later.”
- The REALTOR® doesn’t care if the property is overpriced, because they will “use” the listing as a lead generator, and then they’ll work on reducing the price later. (This is a rare occurrence, but there are bad apples in every profession, and Real Estate is no exception.)
The overwhelming most likely result of all three scenarios is this:
After a very long time on the market, and having the price adjusted multiple times, the property finally sells at a much lower price than it would have if it were priced correctly in the first place.
This is the opposite of what the public seems to believe about pricing, which is, if they are patient enough and “not in a hurry,” they’ll get their price eventually! But every professional REALTOR® knows that the opposite is true.
The quicker a property sells, the more money a seller is likely to get.
A new listing always generates the most excitement and interest. If priced correctly, buyers are fearful that someone else might buy “their” new home, and therefore, they’re more likely to put forward a strong offer.
But pricing is tricky! In fact, in my opinion, accurate pricing is hands-down, the most challenging part about being a REALTOR®.
Not only is it the most challenging part, but there is virtually NO training available anywhere to teach REALTORS® how to strengthen their skills in this critically important area.
Why? Because the truth is that hardly any REALTORS® are highly skilled at pricing. And if they are, they don’t want to teach their hard-earned skills to their competitors.
But who else are you going to learn from? Someone who’s never even been a REALTOR®? Ya, right.
Confession time: After several years of experience and having listed and successfully sold HUNDREDS of properties, I still felt very unsure of myself when it came to pricing.
Do you feel this way?
If so, this proves you are a high-integrity agent; one who takes your responsibilities seriously and one who doesn’t want your clients to have to pay for your costly mistake.
I used to agonize for hours over pricing, long into the night, preparing for a listing appointment the next day. I didn’t want to get it wrong!
The opposite of this is the agent who spends a quick 15 minutes looking at comparables and thinks he can produce an accurate price. Or worse, the agent who pulls a price out of thin air, with ZERO homework. This happens far more often than the public realizes, often with slick “celebrity” agents who spend more time worrying about their public “image” than actually doing a good job.
These types are the exception to the rule, thankfully.
Most REALTORS® try their best when it comes to pricing, but it’s still the toughest part of the job, with virtually no proper training available.
Think about it. You want training on how to make cold calls, and recite scripts on how to GET listing appointments? No problem! There are a hundred trainers to teach you those “skills.” (Not me).
But beyond the most basic text-book stuff they taught you in Real Estate School, which is entirely unrealistic in the real world, training on being a pricing expert is practically non-existent.
The Big picture CMA and Pricing Psychology are two of the most eye-opening and in-depth modules in the entire Agent Skills Master’s Program.