I got an email from an agent in our tribe asking for help with this one. This is such a frequent and important challenge that I thought addressing it in a blog would be ideal.
In a nutshell, the seller has listed their home with the agent, and the price is too high. They aren’t getting any showings. There has been a price reduction already, but the price must be lower if they are to sell the property successfully.
The familiar, “We’ve already come down xx$” comment from the seller is frustrating the agent, and she doesn’t know what to do.
Those familiar with my way of thinking know that I believe you shouldn’t take overpriced listings. It negates your value as a trusted strategic partner in the sale of your client’s home. If you accepted a listing at a higher price than is strategically beneficial to your clients, you have lost the negotiation with the seller, and from now on, you will seem weak in their eyes. They feel that they are in conflict with you, which will never allow for collaborative problem-solving.
But what to do when you are already in this situation? It depends on how you ended up here.
If they insisted on a high price and you reluctantly agreed, then the path forwards it to redefine the relationship into one of a collaborative partnership or release them from the listing.
If you mis-priced the property (we have all done this at some point), you need to come clean about this and give them the option of adjusting to the current market conditions or being released from the contract.
If they are just trying to sell for a high price and take advantage of the strong seller’s market, you need to establish this with them and then decide if you want to keep the listing on a hope and prayer that someone will buy it. (It occasionally happens in a strong seller’s market) It would be best to prepare for the listing to expire and for the seller to move forward with someone else.
Use your MCNE skills to understand what is going on with the seller. In this case, I’d start with the SAM model. Why are they sticking to this price? What is going on beneath the stand, and what is happening emotionally with the client. Take your time with this and be thorough in your collection of information. There is a perfect chance that they need to sell and are feeling fearful. It’s also possible that they have some misinformation, or perhaps they don’t want to sell at all. Don’t make assumptions about what is going on. Do the work to find out.
When a seller says, “I’ve already come down xx$,” it’s a great example of the power of anchoring. By allowing them to list at a high price, they have become attached to that number, and now everything is in relation to that number. It’s vital not to allow bad anchors to be set.
It makes it difficult for our clients to make the right decisions.
Don’t be afraid of talking to your client about these negotiation tools. They need to know that you are deeply committed to getting them the best outcome. Work hard to understand what is making them unrealistic, and do your best to help them unravel that.
And – some people are just plain unreasonable and if you exhaust all of your tools and they still won’t budge, likely offering to release them from the listing is a good option.