How to Talk to Your Sellers About Price Reductions

August 13 2014

client interactionDoes your seller have an over-inflated opinion of their home's value? Many do. While you can head off the problem of bloated listing price early on with a detailed CMA and firm advice, eventually every agent will find themselves in the position of having to initiate a tough conversation with their clients--that of reducing the listing price.

It's not an easy topic to broach. Sellers have an emotional investment in their home that doesn't always allow them to look at pricing in a rational way. Luckily, there are ways you can approach the reduction discussion that appeals to both their feeling and thinking sides. Here are a few suggestions:

Use different terminology: Call it a "price adjustment" rather than a "price reduction." By using a different term, you frameframe your objective in a new way and change your seller's focus. The word "reduction" brings to mind the idea of loss (of money, in this case). "Adjustment," on the other hand, suggests that you are using your expertise to fine-tune the price so the listing doesn't languish on the market.

Remind them of their holding costs: The faster you are able to sell their home, the more your clients save on expenses like mortgage payments, insurance, utilities, taxes, and more. Crunch some numbers--a quicker sale at a lower price may actually end up saving your clients money.

Present numbers: No showings in 10 days? No offers in the last month? Let your seller know that statistics like these are an indicator that the asking price is too high. Also, make them aware of the realities of the local market by showing them the prices that comparable properties have recently sold for. If your seller's price diverges too far, let them know they'll have a hard time competing.

Highlight the built-in marketing opportunity: Price adjustments are an effective way to get new eyeballs on your listings. Consumers who are signed up for listing alert emails will be notified of the change in price. Buyer's agents will be reminded of the property when it appears in the weekly MLS hot sheet under "price reductions." It's very likely the change may reinvigorate interest in this property and its newly "motivated seller."

Share feedback from buyers: Collect feedback from showings to get a grasp on what buyers and their agents think of the home's price and general saleability. Here are some questions to ask. If a home is overpriced, it's likely that this will be mentioned over and over in the showing feedback. Share this with your client to help nudge them towards a more competitive price.

(To learn about an easy way to collect and share showing feedback, watch the recording of our recent webinar.)

Remember, proper pricing can make or break your business. Regardless of the staging, marketing, or other extras, an unrealistic price can make your chances of selling virtually nil. Reductions can be your saving grace--they'll accelerate a sale and decrease your overhead--but it's all about getting your sellers gracefully on board. We hope these ideas help!

How do you approach conversations about price adjustments? Share your tips in the comments below.