Unstick Your Stuck Stock
While visiting a real estate office in Perth recently, a salesperson told me that ‘all‘ the sellers he met wanted too much for their properties. He said, “Nobody is realistic – they all want too much and if they can’t get what they want, they won’t sell.”
Now I could have argued that thinking in absolutes was the cause of his poor results – ‘all‘ the sellers he met? ‘Nobody‘ is realistic – what, he hadn’t met so much as one realistic person? But I knew he wasn’t going to be convinced because this would have meant that he had to take personal responsibility for his poor results, and he wasn’t about to do that.
What I found most interesting was that this salesperson was operating in a booming Perth market. Yet the same problem that dogged him was causing concern to his counterparts in the eastern states of Australia (many parts of New Zealand too) that are no longer booming.
This tells me that it’s not the market to blame: it is the lack of skill on the part of the salesperson.
Regardless of the market, if a property is not selling most probably the price is too high. Deep down we all know this truth, even if many do not want to face it.
Lack of skill in obtaining reductions in asking prices is the root cause of low sales.
The only real listing a salesperson can have is not so much the one that is ‘priced right’ as the one where the sellers totally trust the salesperson handling their sale. If you have trust, your sellers will follow your advice and your properties will be priced to sell, meaning your sellers will be happy and you will make sales.
There are two keys to making sales through Asking Price Adjustments:
- Set it up at the listing presentation.
In our sales program, Winning Ways – Real Estate Sales, there are plenty of suggestions for helping sellers to take their focus off the asking price and to focus on what is truly important: selling and as a result, improving their lives.
Sellers are taught to understand that price is just one component of marketing and that by becoming too fixed on the asking price, they may fail to focus on the most important price of all – the Changeover Price, which is the price it costs to move.
For example, if you sold for $500,000 and bought for $600,000, your Changeover Price is $100,000. This is what it costs you to move. If both the selling price and the price you could buy for both dropped by 10 percent, you would now sell for $450,000 (10 percent off $500,000) and you would now buy for $640,000 (10 percent off $600,000). Your Changeover Price is now $90,000.
That’s right: even though you lowered your selling price by 10 percent, it cost you $10,000 (coincidentally also 10 percent) less to move.
“But my market is booming!” you say? OK, so you wait for a higher price. You now sell for $550,000 (10 percent increase on $500,000) and you buy for $660,000 (a 10 percent increase on $600,000) so your Changeover Price is now $110,000.
By holding out for that extra 10 percent, it cost you an extra $10,000 to move!
Shouldn’t we help our sellers to focus on the right price – not the Asking Price, the Changeover Price?
- Contact all your sellers within two weeks if they have not sold.
While you are at the listing presentation, make a note in your diary in front of the sellers to visit them to discuss what the next asking price will be. That’s right; there is no argument about the price coming down, because you set the sellers up for this eventuality at the listing.
So now it’s not a matter of whether the price will come down – it comes down in two weeks. The discussion in two weeks’ time will be about how much the price will come down.
Make your sellers understand that it can actually cost them by ‘holding out’ instead of selling now. It is irresponsible of a salesperson not to regularly point this out to sellers.
Many sellers think that reducing the price means they will be getting less. Many salespeople accept this thought. Nothing could be further from the truth. A seller who reduces actually gets more, not less.
You see, they are never going to get the price they are at now, nor will they get it in the foreseeable future. Therefore, they are getting nothing now.
Say this: “I might be asking you to reduce the price, but I am not asking you to reduce the price you are going to get.” Think about this statement – it makes a lot of sense.
Of course, you can do what most mediocre salespeople do – sit, wait, and hope. But this is not going to make you many sales, and it is certainly not going to make you many friends among your sellers.
Get out of the office and into your sellers’ homes. Talk to them. Help them to see the wisdom of reducing and getting on with their lives.
Unstick your stuck stock.