For more than two decades, Tim and Julie Harris have been leaders in the real estate industry, first as top producing agents, and now as sought-after business coaches. Their latest book, Harris Rules: Your No-BS Practical Step By Step Guide to Finally Become Rich and Free, is an international best seller. Learn more at timandjulieharris.com.
Teaching Agents How to Price a House
New agents need guidance, especially in a tough market. Brokers and managers can pass these tips on to their team of real estate pros.
July 12, 2019
Pricing a home correctly can be tough for newer agents, but pricing a home in a highly competitive market can be a real challenge even for seasoned pros.
Help your agents nail the right price by sharing some tricks of the trade and rules to live by as they prepare a listing presentation for a selling prospect.
First, motivate your agents with these tips:
- Price the home to sell, not to sit.
- The best price reduction conversation is the one an agent will never have to have because they priced the home correctly from the get-go.
- An agent should never lose the listing of a motivated, must-sell seller over price. Someone is going to make a commission on that property … that someone might as well be you.
The rules for pricing a home all involve agents doing their homework and research before going to a listing appointment with a prospective seller. Here are three steps that will help your agents get it right.
- “How did you find me?” Right off the bat, your agent should ask the prospects how they happened to contact him or her. Whether through a former client, family member, friend, colleague, or your website as they were browsing homes for sale, your agents need to be able to track their business. All of these referral sources give insight on the prospective clients. The agent should then thank the referral source the very next day for their kind words. In turn, they will feel great about the agent giving them credit for making the referral, which will further reinforce their decision.
- “Why do you plan to move and what’s your timeline?” Before the listing appointment, the agent should find out what the prospect’s motivation and time frame are for selling the home. Is it a new job, health reasons, a change in family circumstances, or a change in lifestyle such as upsizing or downsizing? Once the agent knows their motivation and time frame, they can service both by providing what they need, when they need it. Agents should pay attention, however, when prospective sellers do not have a specific time frame or reason for moving—they may be just testing the waters and wasting your agent’s time.
- “Do you have a price range in mind?” Again, prior to the listing appointment, the agent must know what the seller’s expectations and needs are about the price of the home. Most markets no longer support aspirational pricing, so an agent should know how the prospects arrived at the price they’d like, want, or need to get. The agent should also know whether or not keeping the house is an option for the owner in case the house doesn’t sell or render the price they want. This means asking some questions over the phone before the initial meeting.
At this point, the ball is the agent’s court to formulate the pricing of the home. This should be done based on research they’ve completed on the specific property before going to the listing appointment with the prospective sellers.
Agent research should include the following:
- Days on the market of comparable homes in terms of square footage, bedrooms, views, upgrades, amenities, condition of the house, and other features. These should be homes currently for sale or that have sold in the last six months in the seller’s specific neighborhood.
- The list-price ratio of comparable homes that have sold in their specific neighborhood within the last six months. This is the difference between the original list price and the closing sale price of the home. For example, our research is showing a list-price ratio range of 85% to 102% in our market.
- The number of homes that are or will be competing with the seller’s home. Of course, the agent should preview the competing homes in person so they can give prospects insights on how their home stands up to the others.
- Determine any new construction or developments that may compete with the listing. The agent should learn about new construction financing and incentives that might enable buyers to acquire a new, more expensive home for the same price as their resale home.
Ideally, the research time before the listing appointment should take no longer than three to five days. Prospects don’t want to wait longer than that once they’ve contacted an agent.
Pricing a home to sell in today’s market is all about the agent doing meticulous research on the prospect’s specific property. Then, at the appointment, chances will be good that your agent will nail the price and win the listing.