Dropping your price must be your last option.
by Neil Jenman
READING TIME: 8 minutes
Okay, the property market has changed. The madness of the boom is over.
And you’ve got your home for sale.
Already, the agent – and half the neighbourhood – is making you feel like a loser. Not to mention the media and, worst of all, the gloom-and-doom forecasters. Real estate Armageddon is coming.
Prices are going to fall by 20 per cent. Or is it 30 per cent?
Maybe more. Maybe worse. Armageddon is serious stuff.
Or so “they” say.
Yes, you should have sold sooner. You’ve missed the peak. Prices are now falling. Will they soon be plunging? Or that dreaded word, “crashing”.
Most of the negativity you have just read – which is what you’re hearing from many sources now – is exaggerated. In general, negativity is led by agents.
The worst time for agents – especially the worst agents – is when a boom ends. Such agents have only one solution to offer sellers whose homes are not selling – drop your price.
Now, of course, dropping your price is something you may have to consider.
But not yet.
Too many agents make dropping the price the first strategy. They know the simple formula for selling real estate – the lower the price, the quicker a sale.
There are plenty of other strategies before dropping the price. And please understand this: Dropping the price of any product or service is always the weak way. It’s what lazy salespeople do. It’s what stupid salespeople do. It takes no intelligence to lower the price.
If the first thing your agent is doing is suggesting you drop your price, you probably need to drop your agent.
Here is what you can do before you even think about dropping your price:
BE PROUD AND STRONG.
If you’ve got a beautiful home – and yes, it can be hard to be totally objective, but please try –you need to be proud of your home and your price.
Don’t be defensive about your price. It’s a beautiful home, it’s in beautiful condition, it’s in a beautiful location and so it’s worth every cent you’re asking.
Stand firm. Be strong.
If you don’t sell, you still own your home. Quality real estate rarely goes out of style. Even if you wait longer or take it off the market and re-sell later, you will find someone who loves it and is willing to pay a good price.
Meanwhile, you still own it. And, as they say in the stock market: “You only lose if you sell.”
YOU ARE NOT A “LOSER”
Please do not let anyone make you feel like a “loser” just because you have “failed to sell”.
If you slashed the price (or worse, cut it in half), you could sell tomorrow. So, if an agent tries to make you feel bad that you have “failed to sell” – you can say: “No, we haven’t failed to sell. We could sell tomorrow at the give-away price you are pushing us to accept. What we are failing to do is take notice of bad advice.”
Do not feel like a loser or allow anyone to treat you like a loser.
PUT THE PRICE UP.
Now, here’s a strategy that will get attention: Instead of dropping the price, increase it.
Go on, give it a try.
As the American billionaire, Michael Bloomberg, explains, every time he has trouble selling something, he “marks the price up” not down. According to Bloomberg, “it works every time”.
So, go on, I dare you: If you have a beautiful home that many people will love – and it hasn’t sold after a couple of months, don’t succumb to what most people do (and what makes their home look bad) and drop the price, increase the price.
And how will you explain it when buyers (or agents) ask what you are doing? Simple, just be confident: “On average, prices in this area increase 10 per cent a year, so we are staying in line with averages.”
You have a beautiful home, and you are not going to be coerced into dropping your price. Not yet. Or at least not until you have tried stronger strategies. Increasing the price shows strength. And, as Bloomberg says, it often works.
Agents will encourage you to drop the price because they say you will attract a new market segment. For example, if your home is priced at $2.3 million and you drop the price to $1.99 million, it’s true, you will attract buyers looking “up to $2 million”.
But the same thing will happen if you increase your price to $2.5 million. You will attract buyers whose price range starts at $2.5 million. Yes, a whole new segment of buyers.
YOU ONLY NEED ONE BUYER.
Stop thinking about buyers in the plural. You only need one buyer – the right buyer for you and your home.
In many cities, there are millions of people, many of whom would love your home. You just need to find the one right buyer.
Agents are always talking about “attracting more buyers”. Or they will tell you that “buyers do not like” some aspect of your home, usually price. You need to say: “Well, these are the wrong buyers; we only need one buyer, the right buyer.”
You are not interested in buyers who are not interested in your home. Their reason is irrelevant. They don’t want your home and you don’t want them. End of story. Move on. Keep looking for the right buyer.
DO NOT INCREASE ADVERTISING!
One of the mistakes made by sellers is falling for the “you need to increase your marketing” pitch. One of the biggest scams in the modern real estate world is getting sellers to pay thousands of dollars for “premium” or “upgrade” advertising.
Do you seriously think thousands of cashed-up buyers are just waiting for homes to be advertised on a premium platform? Of course not.
You don’t need to spend thousands of dollars advertising your home. Just ask the thousands of sellers who have been conned by the premium pitch – and nothing happened. Indeed, the more you advertise, the more desperate you look. Do less advertising, not more.
TELL YOUR AGENT TO WORK HARDER.
Most agents are Lazy – with a capital L. They have one strategy – advertise on the internet and sit-n-wait for buyers to contact them.
Most agents have records of hundreds, even thousands, of past “buyer enquiries”. Is your agent contacting these past buyer enquiries and telling them about your beautiful home and inviting them to see it?
And please remember, “contact” does not mean sending a blanket email to thousands of people on a data base. That’s more laziness. You need an agent prepared to do the hard work which means following the first rule of selling – TTP, Talking to People.
Seriously, do you really want to fund the laziness of your agent? Of course not. So, tell the agent: “You want us to drop the price; we want you to do some work to get us the price our home is worth”
Here’s something else you can say to an agent:
“Why don’t you give me the names and numbers of every prospective buyer who has contacted your office in the past six weeks, and I will call them and see if any are interested in my home? If this leads to a sale, who gets the commission – me or you?”
I hope you get the point: One reason homes are taking longer to sell now is not just that the boom is over, it’s that the hard work has not started.
Don’t drop your fair price, drop your lazy agent.
What’s wrong with waiting longer – especially for that “right buyer”?
It’s not just that prices are “off the boil”, something else is happening in today’s market in many areas: Homes are taking longer to sell.
And agents hate it.
The longer a home takes to sell, the longer agents wait to get paid. They’ve got lease payments on flash cars, plus a lifestyle to which they are addicted. They need you to drop your price.
Yes, and you need them to get to work.
Nothing infuriates agents more than sellers who say, “We are not in a hurry, we will wait.”
The agents know something else: Their time is running out. The expiry date on their selling agreement is getting closer. If you hint that you may try another agent, that can be enough to make your agent start working harder at finding the right buyer for your home instead of nagging you to lower your asking price.
Here’s something to consider: If a buyer offered to pay your price – sign a contract now, but you had to wait six months for the money, would you agree? Most sellers would say yes.
Well, that’s just the same as waiting six months.
One day, the right buyer will come. If you are willing to wait, if you are willing to stand up to the pressure from [lazy] agents, the chances are good that, one day, you will get your price.
But please, for your sake, don’t make the first thing you do be the lowering of your price.
Lowering your price should be your last strategy. It should only be done after the agent has convinced you that everything else has been done.
YOUR PERSONAL SITUATION.
Here’s something to consider: If the market truly is dropping and you intend to upgrade, a falling market might be better than a booming market.
Sure, your home for which you hoped to get $3 million may have fallen by 20 per cent and you may only be able to achieve $2.4 million – which feels like a $600,000 “loss”. But if the home you planned to buy was going to cost you $5 million and you can now buy it for $4 million, that’s a $1 million gain.
So, in this extremely hypothetical example, you “lose” $600,000 but “win” $1 million; so, you are $400,000 in front.
If you are prepared to do your research and you find a good agent to help you sell well, you should still be able to sell for a great price and then buy for a discounted price.
Yes, things need not be as gloomy as first thought.
It’s always possible to do well in real estate.
At the very least, you should make sure you get the best result for yourself.