Why Price Adjusting is Key to Closing More Deals: Strategies for SuccessApr 21, 2023
In the world of real estate, setting the right initial price for a property is a critical step in the sales process. However, it's important to remember that this initial estimate is just a "best-informed guess" and may need to be adjusted based on market activity and buyer interest. In this blog post, we will explore the key strategies for successful price adjusting, including effective communication with property vendors, staying up-to-date on market trends and fluctuations, and using targeted marketing strategies to generate renewed interest in the property. By following these tips, real estate agents can maximize the sale price achieved for sellers and value gained for buyers, ultimately closing more deals and achieving greater success in their business.
Setting the Right Initial Price
Contrary to popular belief, real estate agents are not actually psychic! We can never say with 100% certainty what a property vendor's property is likely to sell for. As real estate agents, it is essential that we have a thorough understanding of the local property market and its buying activities. This knowledge allows us to make an educated estimate of the likely selling price of a property. However, it's important to note that this estimate is still a "best-informed guess," as there are numerous factors that can impact the final selling price.
It's essential that every price marketing negotiation between a real estate agent and their property vendor concludes with an agreement to revisit the price marketing strategy within a set period after the property goes live to the local buying marketplace. This allows for adjustments to be made if necessary, based on market activity and buyer interest. By agreeing on this, both the agent and the property vendor can be confident that they are taking a proactive approach to ensure the best possible selling outcome for the property.
To successfully and effectively adjust the price of a property listing, with the goal of getting the property sold at the best price within an appropriate timeframe, it's crucial to start the conversation around price adjustment as early as possible. This means beginning the conversation from the point when the signed listing authority is in your hand. By doing so, you can educate and prepare the property vendor for potential price adjustments and ensure that they have realistic expectations for their property's sale. This approach will also help build trust between the agent and the property vendor, as they will understand that the agent is taking a proactive approach to ensure the best possible outcome for the sale of the property.
It's important to clarify that when I mention starting the conversation around price adjustment early, I am not advocating for an underhanded or bullying approach. I'm not suggesting that agents battle the seller down on the price as soon as the property is listed just to achieve a quick sale and get paid. Any real estate agent who employs such tactics will not build a fulfilling, long-term, and financially abundant career in real estate sales. Instead, what I am referring to is the ability to speak with the property vendor and their listing in a consultative style, like that of a property market expert. This approach involves being honest with the property vendor about the current market conditions and the likely outcome for their property's sale, while still striving to achieve the best possible outcome for the seller.
Starting the conversation around potential price adjustments at the point of a signed listing agreement can educate and prepare the property vendor for their listing and sale journey. By doing so, the agent can establish a clear trajectory for the property's sale and build trust with the vendor. If tough conversations around price adjustments are necessary, the vendor can feel secure knowing that the agent had informed them of the potential timeline for their listing. So, if you do need to have those tough conversations with the potential seller, they can feel secure that you might inform them that this was a potential option so as to achieve the best sale price for their listing, as opposed to them being skeptical that you're losing interest in selling their property, and just want to lower the price to get a quick sale.
To successfully start a conversation around the potential for price adjustments, it's essential for the agent to have a deep understanding of the current state of the property market and how it may impact the property vendor. This knowledge allows the agent to speak to the vendor in a consultative manner, like that of a local property market expert, which can help the vendor feel more comfortable and trust the agent's guidance.
By doing so, agents can effectively communicate the potential for price adjustments and establish themselves as trusted advisors to the property vendor.
In addition to understanding the local property market, it's crucial for agents to have a good understanding of the needs of the property vendor. This includes recognizing that price adjustments may be necessary in challenging markets and that the stress of selling in such markets can impact the vendor's mindset. Therefore, agents should lay the groundwork for potential conversations around price adjustments early in the listing process, which can help keep the vendor in the right mindset and align their plans and intended goals with the likely outcome of the sale of their property.
In challenging property markets, many events, life changes, and financial strains can motivate vendors to sell, regardless of market conditions. Sellers may need to free up cash or downgrade their property to reduce expenses, and they may feel anxious, stressed, fearful, or uncertain about the future. The uncertainty of a challenging market can cause some sellers to feel disappointed or regretful, particularly if they feel they are not getting the price they deserve. To effectively assist potential sellers in challenging or shifting markets, agents must understand these needs and attitudes and provide guidance and support to help vendors sell successfully.
The easiest way to soothe these tensions in the property seller is to speak with them in a consultative manner and at the level of a local property market expert. Agents who become local property market experts can set themselves apart from the competition and establish a reputation as reliable, knowledgeable, and effective real estate agents. By knowing every property that has sold in the marketplace, what properties are currently for sale, and market trends, agents can better advise clients, provide effective marketing strategies, and negotiate optimal deals. To become an expert, agents should drive through their local marketplace daily, review the last 12 months of sales in their suburb, stay informed about local government and the state of business and the economy, and understand their competition and neighboring/similar marketplaces. By following these steps, agents can attract more business, close more deals, and achieve greater success. It will also help your current potential sellers lean into your guidance around price negotiation with trust.
Monitoring the market
Once the property is listed, I strongly recommend that you check your local market statistics daily and stay up-to-date with all properties that have listed and sold in the past 24 hours.
Neglecting marketplace awareness after listing a property is a common mistake made by many agents, this is especially problematic to an agents success in shifting markets.
To gain a competitive edge in the local property market, it is essential to be aware of other listings that will be competing with your own. By visiting these listings, you can gain a better understanding of their features, amenities, and pricing, and how they may affect the sale price of your own listing. Armed with this knowledge, you can adjust your sales pitch to showcase the unique value and benefits of your listing to potential buyers, as well as keep your client, the property vendor, informed of the competitive landscape. This will help them make informed decisions about pricing and marketing strategy to attract the right buyers and achieve the best possible sale price. Ultimately, staying informed about competitive listings will enable you to position your own listing more effectively, address the pricing strategy where required and increase your chances of success in the local property market.
Communication is key – as always.
The key to effective and proactive price adjustment to ensure your property listing sells for the best possible price in the best possible timeframe is effective communication with the property seller.
As a real estate agent, poor communication is a common complaint from vendors. It's important to take a strategic approach to communication with your property vendors. The key to success in this area is consistency, relevance, and taking steps to build trust and demonstrate your commitment to their needs.
The art you need to master is consistent and effective communication with your vendors. The knack to this is to make sure that the communication is relevant to your client's needs.
Once you have the property vendor signed up as a new listing, the absolute minimum communication your new vendor should receive from you are as follows:
- A vendor report on how the property performed on the market in the previous week. Include in this update, an update on how the properties that would be considered in direct competition to their listing performed on the marketplace in the same time period. I would also include an overall report of the marketplace including the total property count, number of listings in total, and number of successful sales in total for that same time period.
- A text message to the vendor after every viewing to share a quick update and buyer feedback.
- A text message to the vendor after every scheduled open home to share a quick update and buyer feedback.
- A weekly call to the vendor to chat through how things are progressing.
- A fortnightly meeting to discuss the pricing strategy should the property not be in offer negotiations in the fortnight previous.
When you champion good, informed, and consistent communication with your current property vendors, it helps them understand and feel that you are a trusted advisor working within their best interest to get their property sold at the best price in the best timeline, even if that means adjusting the sales price is what is required to achieve that result. Simply because they trust that you know best what needs to be done to position the property correctly to achieve the selling offer on their property.
Putting an effective price adjustment strategy into plan is all about timing and correct marketing for it to work optimally to achieve the best possible price for the property vendor. It’s not enough to simply lower the price of the property - the timing and marketing of the adjustment are crucial to its success.
Timing is key when it comes to price adjustments. Staying up-to-date on market trends and fluctuations, and how quickly effectively priced competitive listings are selling are key indicators as to when to implement a price adjustment strategy, especially if your listing is lagging behind the norm for the marketplace or if competitive listings are selling where your listing has been passed up by the buying market.
Effective marketing of the price adjustment is also crucial to generating renewed interest in the property. Agents should ensure that the price adjustment is prominently displayed in all marketing materials, including online listings, brochures, and advertisements. Remember to highlight the benefits of the price adjustment to potential buyers, such as the opportunity to purchase a property at a lower price point or the potential for a higher return on investment.
It's also important to continue showcasing the property's unique features and highlights and emphasize how the price adjustment makes it an even better value. Using targeted marketing strategies to reach potential buyers who may be interested in the property is another effective approach, such as those who have viewed similar properties or expressed interest in the area. Leveraging social media platforms to promote the price adjustment and generate renewed interest in the property, such as through targeted ads or promoted posts, is also an effective strategy.
Putting an effective price adjustment strategy into plan is critical to achieving the best possible price for the property vendor. The timing of the adjustment, coupled with effective marketing strategies, is key to generating renewed interest in the property and ultimately achieving success in the sale. By working closely with both seller and buyers and using these proven strategies, real estate agents can maximize the sale price achieved for the seller and value gained for the buyer.
In conclusion, price adjusting is a key strategy for real estate agents to close more deals and achieve the best possible outcome for their property vendor. By starting the conversation around potential price adjustments early, monitoring the market for fluctuations and trends, and communicating effectively with the property vendor, agents can build trust, establish themselves as local property market experts, and maximize the sale price achieved for their clients. With the right approach and strategies in place, agents can navigate challenging markets, attract more business, and ultimately achieve greater success in their real estate careers.