A Simple and Powerful Tool to Help Sellers Shift Their Perspective on Pricing
3 min read
Shifting Sellers Perspective on Pricing – A Simple and Powerful Tool for you.
Written 100% by Suze – No AI.
They want more than it’s worth. Of course they do. We all over value our own assets and with the COVID bubble still in the rear-view mirror, many sellers are making bad pricing decisions.
The peak price for real estate across Canada was March of 2022. That was 23 months ago. Prices since then have fallen between 8-20% depending on the micro market conditions.
The economy is still struggling, interest rates are holding steady and are predicted to come down a bit sometime mid to late 2024. There is a severe housing shortage in Canada, the economy is at or near recession with a soft landing now predicted. Housing affordability is at an all-time low. This market is highly unpredictable.
In many cases, sellers are having trouble accepting the market shift and are wanting to ask more for their property than it is worth. This is always true in a declining or balanced market. You need to equip yourself with the skills to help them make the best decisions.
Let’s look at what’s happening psychologically here. The seller heard a number at the peak of the market that was very exciting. They never really imagined their home would be worth that much and it made them feel wealthy, confident, optimistic and on top of the world. They think they are special for having such a valuable asset. They become attached to that number (this is called anchoring in negotiation speak) and while they know that prices have adjusted, they have a really hard time letting go of that anchor. They may agree to come down a bit but in many cases it seems impossible to get them see market value and agree to an asking price or offer in that range.
You end up with a bunch of overpriced listings, buyer offers that go cold and the stress of low productivity for you and/or your team.
You need to help the seller “see” it differently. We call this perspective shifting and it’s a valuable tool to help your seller clients make better decisions.
They are seeing their situation from the top down and feel like they have lost a bunch of money. If it might have sold for $1.3m at the peak and is worth $1.1m now, they think, they’ve lost $200,000. That is hard to take. I would find it hard to take a loss of $200,000 on my real estate – wouldn’t you?
But that isn’t what’s happening. They didn’t sell at the top. In fact, very few people did. It was a COVID bubble and that bubble is bust.
What you want to do is to help them see it from the bottom up. What was their property worth before the COVID bubble? And what would it likely be worth if the COVID bubble never happened. Below is a quick screen grab of graph showing you how you can help them form a more accurate perspective.
This graph shows the COVID bubble very clearly and the subsequent price correction.
What is important to point out to them is the line that projects price if the average annual appreciation had continued and the COVID bubble hadn’t happened. The Blue line clearly shows that they are still way ahead of that and that there is still a bunch of COVID money built into the current market value. In fact, this this case, they are over $100 ahead of where they would have been if the market had experienced average appreciation. This tells us that it is, in fact, an up market and therefore, a good time to sell.
I hope this helps.
If you like this tool, recreate it for your local market conditions.
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