5 Pricing Strategies in Real Estate

Hello and welcome to Mike Ferry TV this week of May 15th. What are experts forecasting for the United States housing market for the rest of 2023? Will housing prices go down during the second half of the year? Do you know there’s no one size fits all answer to these questions? The housing market in the United States will likely vary depending on location and other factors. Some experts believe that the market will decline throughout 2023, while others believe that home prices will rise. Well, what we’re actually seeing is both happening depending on what part of the country you’re in. One thing we know for sure, the days of just taking a listing and waiting for 22 competing offers within the first 24 hours are over.

“We are going to have to improve our skills to succeed in this changing market.”

We are going to have to improve our skills to succeed in this changing market. Mike has been telling us now that we’re in what’s known as a normal market, and many of you have never worked in a normal market. All you’ve known is the Seller’s market that we’ve experienced for the past few years. That’s made the.. past few months that are more difficult for you. Well, folks, those Seller’s market days are gone. We need to improve our skills and get to work. The great news is that you are Mike Ferry-trained agents and have the tools necessary to succeed in this market. And your success in getting listings sold always begins with the price. The sooner you price it right, the faster it sells, the smoother your business runs and the happier the Seller is, and the more money you make.

Real Estate Pricing Strategy

That’s why Mike asked me today to talk to you about pricing. Who wants to have happier Sellers? Who wants to have a smoother business? Who wants to make more money? Let’s raise both hands. Then all you need to do is take more listings and price them right. Easy-peasy. So what’s causing all the commotion and what can you do about it? Most experts in the housing industry predict less Buyer demand, lower prices, and higher borrowing rates. Interest rates have been trending upwards and that, along with the shortage of availability, has pushed many purchasers to the sidelines.

“The market does not determine your future. You do.”

Home prices may fall slightly, but probably not as drastically as they did in 2008. Some believe that the housing market will continue to outperform compared to the pre-pandemic. The housing market is always in flux and predictions for the future can be challenging to make. Do you know what the exciting news is? It doesn’t matter. The market does not determine your future. You do. Thef market does not determine whether you’ll be a success or how much money you’ll make. You do.

When I purchased my first home back in 1982, interest rates were 18% and I still bought a home. Our job as agents is to place our listings strategically in the market and to drive as many Buyers as possible to that home in order to negotiate the contract. So how do we do that? How do we do that?

No 1 – Start by always telling the truth

Number one, start by always telling them the truth, no matter how uncomfortable it can become and it can be uncomfortable. See, the problem with too many agents is they always … they’re always selling two-story houses. One story before an offer comes in and another story after the offer. Just tell the truth.

No 2 – Go in 5% under market value

Number two, go in 5% under market value. When the Seller talks you up then, you’ll be at market value. Okay. So how can you do that? Preview property. Preview property. Preview property. Before you go on a listing appointment, preview the top two or three active comparables before the appointment. Imagine what power you’ll show to the Seller when you’re able to say, “I’ve seen this house. It’s better than yours because of A, B, and C and yours is better than theirs because of X, Y, and Z.” See, this will give you a stronger knowledge of your local market and will give you more confidence in pricing during the Listing Presentation. It will also make the seller a lot more confident in you. Remember, when you focus your analysis on what’s already sold, you’re focusing on what happened yesterday. When prices are decreasing, that puts you in a position of always overpricing homes. Instead, certainly, you have to look at what’s already sold. I get that. But also look at what’s active on the market and ensure that compared to the actives, your listing ranks number 1 or 2. So if just one home sells or two homes sell, it can be one of yours. That comes with the previewing of those active listings.

No 3 – Set them up for a price reduction

Number three, as you near the end of your presentation, be sure to set them up for a price reduction. Even try to get your price reduction pre-signed at the Listing Presentation and prior to that put a blank price reduction form in their Pre-Listing Package so they get used to seeing it.

No 4 – The second price reduction is 10 times harder to get

Number four, this is a hard one. Turn down a price reduction. Turn down a price reduction if you can’t get the price that you need because the second price reduction is 10 times harder to get. Instead, turn it down if they don’t give you what you need and call them next week and ask them for the full amount again. Have you ever gone too low for a price reduction because you knew in your mind that they would never give you what you need? How did that work for you? Remember, point number one, always tell them the truth.

No 5 – Know when the house is overpriced 

Number five, if there are no offers after two weeks or if you haven’t had any offers and you’ve had ten showings, the home is overpriced. See, we can make mistakes as Buyers and Sellers. We can make mistakes as agents. But the market doesn’t make mistakes. The market isn’t wrong. Your home is at least 5% overpriced and it could be a lot more. Why did the Sellers hire you in the first place? It wasn’t just because they wanted your sign in their yard. They want their home sold. So let’s all continue to take listings as that’s the key to success in any market. And let’s also work to ensure that they’re priced to sell, as that’s why the Seller hired you to get their home sold.
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