Pricing a home is one of the most challenging tasks for real estate professionals. We’ve all made mistakes, and hopefully learned from each of them. Personally, I learned that the words and phrases I use have a huge impact upon the emotions and decision-making processes of my sellers.
There are three words and phrases that can raise the expectations of the seller and/or set them up for future disappointment. Here are those words and phrases, along with some recommended alternatives:
1. “Price” vs “Position” – We use the word “price” over and over again in a listing appointment when talking to sellers about their home and the market. Why can it cause a potential problem? Because the word “price” means worth or value. Even the best agent cannot determine worth or value for a home. The value of a home is determined at one specific moment in time, and that moment is when the property closes and is transferred into the new owner’s name. That value, by the way, lasts only until the next comparable property closes, which could be hours, days, weeks or months.
Rather than talking about “pricing” a home, we talk about “positioning” the home in the market. To “position” something is simply to place it among others. We look at the homes that buyers have to choose from in the same price range, and suggest that the sellers “position” their property on that list.
“Position” never suggests worth or value; it simply places the property somewhere in line with other sellers in the same price range.
2. “List price” vs “Initial Market Position” – If “price” means worth or value in sellers’ minds, then list price means, to sellers, that the house should sell for that “price,” because it is worth that amount! If, instead of establishing a list price for sellers, you suggest they establish an “initial market position,” the sellers know, upfront, that the number they throw out to the market is a starting point.
It is a cycle:
- Sellers offer the home to the market
- The market responds to the sellers
- If the market does not respond in a way that will get the sellers where they want to go, on time, the sellers respond to the market
3. “Drop or reduce the price” vs “Reposition the property” – If “price” means worth or value, then “dropping or reducing the price” means lost money or lost equity to sellers. Why plant that seed? Instead, we can simply suggest that when the market is not responding in a way that will get the sellers where they want to go on time, the sellers can “reposition” their home among the list of competing properties.
Try this new dialogue:
Mr. & Mrs. Seller, tonight our plan will be to study the market, identify how many other homes in your price range buyers have to choose from, and then ‘position’ your home on that list so that we can attract today’s buyers. Once we set the ‘initial market position’ for your property, we will market to the buyers and buyer’s agents and then read the market’s response. If the market does not respond in a way that will get you where you want to go, on time, we will look at the competition again and you can ‘reposition’ your home to get a better response.”
Jackie Leavenworth is the owner of Jackie Leavenworth Seminars. She is a Certified CRS Instructor, and has coached agents around the United States. A Cleveland native, Jackie was licensed in 1984, and quickly became her company’s top producer.
For the bigger picture, for more strategies and a full understanding of this theory visit www.CoachJackie.com. There are video clips to help and there is a live three-hour presentation on audio CD that was recorded by a professional recording company. Listen and learn.