When a seller looks for an agent, the biggest question on their mind is the PRICE. Real estate agents need to be prepared for this discussion so they can navigate the pricing concerns of their seller. In this episode of Million Dollar Playbook, Sharran discusses pricing strategies with Bob Chapman. Bob Chapman prides himself in being market specialist who offers pricing strategies that are informed by the market. Using his own experiences as a template, Bob breaks down the pricing discussion so that agents, buyers, and sellers have the framework they need to agree on a price.
3 Key Points
- Sellers do NOT want to leave money on the table; be prepared for your discussion around pricing as YOU are the market specialist.
- Don’t let the seller use the price as an ultimatum to list with you; instead, show them a couple of pricing strategies they can use.
- Be personally committed to the WHOLE process with your client—your success is tied together.
Show Notes
- 00:35 – We spend a lot of time generating leads that we forget about pricing
- 01:25 – Sharran introduces Bob Chapman
- 01:50 – Bob Chapman has worn many hats in the real estate industry
- 03:00 – The biggest question on the seller’s mind
- 03:16 – When a seller goes to a broker to list, the first thing in their mind is usually the price
- 03:39 – A buyer who searches the marketplace knows the appropriate price range
- 03:49 – The seller will not want to leave money on the table
- 04:51 – “The price that they’re going to get is paramount in their mind”
- 05:28 – Seller might set their mind on a specific price
- 06:08 – How Bob frames the seller’s concerns
- 07:00 – Bob tries to keep the seller comfortable with the comparable information and pricing negotiation
- 07:09 – Bob tells the seller that while the strategy may not leave money on the table, it’s not 100%
- 08:00 – In the beginning, talk about the home, then work your way to discussing the marketplace
- 08:26 – Use the notion of leaving money on the table as a guide
- 09:35 – During listing presentations, agents usually pull out a CMA when pricing comes up
- 09:46 – Agents go directly to the numbers, but it’s not framed well
- 10:13 – Bob shares how he talks about the direction of the market
- 10:21 – The market has 3 directions
- 10:26 – When you list a price for sale and the market is relatively flat, your home will be priced close to the comparable
- 10:38 – In 2000-2008 market, you need to be aggressively ahead of the market and price your home below market value
- 11:25 – The trajectory of the price is moderated
- 11:30 – Bob has a blog about the general marketplace
- 12:00 – You don’t want to be too aggressive in the marketplace
- 12:50 – You are the local market specialist and you understand the trend in the market
- 13:31 – Once you’ve established the trend of the market, you can give your client the value spectrum
- 13:44 – We are in a moderately upward market
- 13:57 – Sellers want to price at a generally acceptable price
- 14:15 – Consider talking about the direction of the market before the pricing
- 15:35 – If the property really has to be on the low-end, it should be on the low end
- 15:50 – Prepare your seller for how your house will compare to their neighbors
- 16:07 – Bob tries to avoid a conversation where price becomes the ultimatum
- 16:21 – You’re limiting your opportunity when you let your seller use the price as the ultimatum to list with you
- 16:50 – Use a pricing strategy
- 17:20 – Have a comparable situation for the value of their home
- 17:40 – Sharran talks about the dichotomy of pricing
- 18:13 – The value spectrum explained
- 19:55 – The profiles of the buyers in the marketplace
- 20:15 – First profile is the one who’s been in the market for 3-8 months, is looking around, and is educated about the market
- 20:50 – Second profile of buyer: new to the market, just started to look, and has a basic understanding
- 21:15 – The profiles of buyers is a spectrum that you need to appeal to
- 23:17 – Knowing their profile will help better inform your pricing strategy
- 25:36 – Agents are great at explaining the pricing strategy
- 25:50 – The second level of questioning is where it gets challenging
- 26:08 – If you use an aspirational pricing, you might alienate some of the buyers
- 26:35 – Agents advise to test the pricing for 30-60 days
- 27:40 – You usually get the greatest number of buyers on Day 1, but this will lessen until Day 20
- 27:55 – The more buyers you lose, the more opportunity you have
- 28:06 – the objective in narrowing the number of buyers is to get to the buyers who are really interested in your property
- 28:35 – The crucial question is the concept of value in the price negotiation
- 29:42 – Showing the property is advantageous for agents
- 30:02 – Whenever Bob has an interested buyer, he asks the buyer after the showing why he’s interested in the property and how he became interested
- 30:40 – When you know the right questions to ask the buyer and their agent, this gives you the advantage
- 30:45 – You can also determine which buyer is right for the house
- 33:29 – It’s not always easy to find the second buyer
- 33:58 – Your personal commitment to be involved in the process gives your seller and you the advantage
- 34:54 – Make sure that the members on your team are all on the same page
- 35:48 – Bob knows how to show the right value
- 36:26 – One of Sharran’s mentors is Bob’s client
- 36:40 – Bob shows his client the market dynamics and how the pricing works—this is how he has built his brand
- 37:14 – Sharran wants listeners to get value from every episode and he and Peter appreciate any one-line message of feedback about today’s episode on iTunes
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Show Notes provided by Mallard Creatives