by Neil Jenman
Reading Time: 7.5 minutes apx
With the real estate world rife with doom and gloom, it’s time to consider ways to defeat the negativity – especially for home sellers.
So, before you slash the price of your home, let’s see if you can still get a great price.
First, let’s start by remembering the wise words of Bill Nasby, a famous American agent.
At around 200 centimetres (6’ 6”), I saw this ex-marine at a conference in Marina del Rey, California. Although 64 years of age, his on-stage presence was commanding. It was the early 90s. Real estate agents had been battling “tough markets” for years. In Australia, interest rates reached eye-popping levels.
Hopeful agents from around the world had come to California looking for the magic elixir on how to thrive in a tough market.
But it was old Bill Nasby who gave them the statement they needed to hear: He stood on the stage, leaned forward, and shouted: “The market is between your ears!”
Stop focusing on negativity, was Big Bill’s message. When times are tough, home-sellers need good agents. Not snivelling whingers.
He told the audience that tough markets made it easier to pick the best agents.
“The difference between good agents and bad agents,” Nasby said, “is that, in a bad market, bad agents spend all their time trying to talk sellers down in price. Good agents spend their time figuring out how to sell homes for great prices.”
“Good agents project positivity”, said Bill Nasby. “Bad agents look like they’ve come from a funeral.”
Although his audience laughed, Nasby was spot on with his assessment.
Bad agents take credit for high prices when a market is booming. But those same agents blame the market when prices are falling, and sales are slowing.
Bill Nasby told agents that it didn’t matter what the market was doing. What always matters most is what an agent is thinking.
Today, in 2022, as negativity hits the real estate market like a rising tide, the same applies to home sellers. If you’re selling, your thinking will have a huge impact on your home sale.
THE MOST VALUABLE PIECE OF REAL ESTATE
One of Australia’s greatest agents (now retired) was Gerald Crough. He was obsessed with looking after home sellers. The former South Melbourne (Sydney Swans) AFL player brought his sense of sporting fairness into business.
As an example of his solid ethical principles, Gerald Crough abandoned auctions in his real estate office. He realised that auctions did not get the best price, they just helped weak agents make easy sales.
Gerald’s standards were always to seek the best, nothing less. If it meant working hard or telling clients what most agents never tell them, that didn’t matter. Gerald did what was right. Not just some time, every time.
When he heard Bill Nasby’s comment, Gerald realised the same could apply to sellers. He told them: “The most valuable real estate is between your ears.”
“How you think,” Gerald would tell sellers, “is how you get the best price – in any market.”
Never is thinking more important than when a market is tough.
Here are some thoughts that both Bill Nasby (who, sadly, is now deceased) and Gerald Crough (who, sadly, is seriously ill) would have sanctioned.
NOT THE STOCK MARKET
The property market is not like the stock market. If the price of your shares fall by 10 per cent, there is nothing you can do. You either sell for the going price or you don’t sell. There is no in-between.
Real estate is different. If the media quote statistics that say, for example: “House prices have fallen by 5 per cent,” that does not necessarily apply to your property.
Unlike shares, each home is different. Two near-identical homes in the same area can sell for vastly different prices. Usually it’s to do with the skill (or lack thereof) of agents.
BE TOUGH ON AGENTS
The easiest way for agents to make sales is to persuade sellers to lower their prices.
Don’t make it easy for agents.
They are going to demand a high commission – an average of around $25,000 in most areas, and yet almost none would do 25 hours work to “sell” a home.
Be tough on agents. Don’t let them be tough on you with lowball offers, negativity and their conditioning.
Make agents work hard. Don’t make it easy for them to earn huge amounts of [your] money for little or nothing. If you drop your price too low, it’ll sell within an hour – seriously.
And then, what?
You pay an agent $25,000 for an hour’s work, only to under-sell your home.
Here’s an inside tip from someone who’s spent a lifetime (decades) in real estate: The tough sellers – those who hold out for a great price – usually get a great price.
The market may be tough, but that doesn’t mean sellers should be soft.
If the market is tough, you be tough too. Tell the agent you want to sell – and that you will be selling – at the price you want. Express confidence that you’ll get a great price.
Here’s another tip: Never tell agents you “won’t sell” unless you get a certain price. That will make them stop working. Say: “This home will be sold. And if you want to be the agent who gets a big commission, get the price we want.”
FIND A “HEART BUYER”
One of the best rules in real estate is this: If buyers love a home and can afford it, they will pay the price you want.
Yes, if you’ve got a home with sought-after features, like a quiet street, close to schools, walk to a rail station and in a tightly-held area, you should never need to slash your price.
The buyers line-up for the best homes and they pay the best price – in any market.
Tell your agent to find you a buyer who falls in love with your home, a buyer who buys with their heart. Tell them to reject bargain hunters who say they’ll “buy if the price is right”.
Right for whom? You or the buyers?
Sure, buyers “try it on” with low offers. And sure, the agent will tell you that “this is the best offer you’ll get”.
Tell them to get lost. And only come back if they pay your price.
If they give you much aggravation, threaten to put the price up, not down. Be serious about it.
THE “CRASH” IS NOT THAT BAD
Headlines are now saying such things as: “Biggest price falls in housing market in 40 years”.
Do yourself a favour. Look beyond the headlines
Let’s take this latest one, about prices falling the most in 40 years. Here’s the truth: Prices fell 1.6 per cent across Australia last month.
On a million-dollar home, that’s $16,000.
Just tell the agent to reduce their commission by $16,000 – and you’re in the same position. Or, if the agent doesn’t want to reduce their commission, tell them not to expect you to reduce your price.
DON’T GIVE YOUR PERMISSION TO SELL LOW
Your home cannot be sold without your permission. Not for any price.
You can refuse to take part in “the property crash”.
There is no “law” that says: “Because prices fell 1.6 per cent nationally, you must accept that much less for your home.”
If agents tell you – which they likely will – that such-and-such a buyer will not pay the price you want, you can reply: “Well, you haven’t found the right buyer yet.”
Always be sure to add the word “yet” to the end of your positive sentence.
If the agent then ups the pressure by saying: “But all buyers who’ve seen your home say it’s too dear,” then just increase the pressure back on the agent by repeating that great statement: “Well you just haven’t found the right buyer – yet.”
The “right buyer” is the one who’ll pay the price you want. Don’t let agents force you to sell to the wrong buyers who want to pay you less.
The buyers are likely to tell you to “be reasonable because the market is falling”. To which you can say: “I am being reasonable. I refuse to take part in this so-called property crash.”
You should also know the average time people live in your area. You can then say something such as: “The buyers who buy this home will hold it, on average, 20 years. I’ll bet it’s worth a lot more in twenty years.”
A good agent will know how to get a good price for you.
CHOOSE A GOOD AGENT
In a booming market, it’s true: “Any idiot agent can sell a home for a high price.”
But right now, when the market is tough, you cannot afford the wrong agent.
You must face a great truth of real estate: Most agents are not smart. They know little about how to negotiate a good price for you.
Most agents are like circus clowns, telling the same silly story every year. When an agent says, “I have been in real estate 16 years,” it’s probably been one year of experience sixteen times.
You are better off hiring a new agent, one who’s been in the business less than a year, than one of these old-time lazy agents who think they know it all.
If you sign-up with a lazy agent, they may soon go on “strike”. If you don’t lower your price, they don’t even try to sell your home.
Good agents know how to find the right buyers and persuade them to pay the right prices.
Good agents are great negotiators. In a tough market, a great negotiator is essential to getting a great price.
All agent’s say they are great negotiators. To test an agent’s negotiation ability, ask them a question such as: “Could you please demonstrate how your skill can get us a great price?”
If you are not impressed, don’t hire them. Find a better agent. Better to spend three or four weeks looking for the right agent than stuck three or four months with the wrong agent.
A “CRASH” MAY BE LESS HARMFUL THAN YOU THINK
Okay, let’s say property prices do go into a freefall – which is highly unlikely – then, for many sellers, it won’t all be bad news.
For the sake of simple maths, let’s say prices fall by 10 per cent. Given that most people who sell their homes are buying another more expensive home, such a fall may work in their favour.
For example, if you are selling for $2 million and planning to buy for $4 million and prices fall, across the board, by ten per cent, here’s what will happen: You will sell your current home for $200,000 less; but you will buy your next home for $400,000 less.
Therefore, if the market falls by 10 per cent you will be ahead by $200,000.
Of course, you could do extra well. If you hire a good agent to sell your home, you may not need to reduce at all. And, given that most agents are incompetent, it almost certainly means you could still buy your new home at a massive discount.
So, by hiring a good agent and holding firm when you are selling, then allowing the falling market to work in your favour when buying, you could be $400,000 better off in the above example. At least.
Many homes are now selling for hundreds of thousands below value. Especially at auctions.
During the boom, many auction agents used to shout: “You’d be insane not to auction in this market”.
Notice how quiet they are now. Still, many agents keep persuading sellers to use auction. That’s true insanity. Auction is a method that no right-thinking seller could possibly consider in today’s market.
But then most home sellers don’t know what you know about the real estate market: The most valuable real estate is between your ears.
Use your valuable real estate to help you succeed in any market.