There’s no denying that the market has made a huge shift in the past several weeks. And now we’re faced with a new problem: How to have the price reduction conversation with our seller clients without them going berserk and throwing us to the curb.
But, as real estate agents, we know that having this sticky conversation will be in the best interest of our clients. So, how do we make them see the silver lining?
I sat down with Sean Moudry, one of the most successful brokers in the Denver market and a frequent contributor at The Close, and asked him to share some of his best pointers on how to best handle this touchy subject.
1. Start With How We Got Here
When Sean knows he needs to have the price reduction conversation, he goes back to the beginning. He likes to frame the situation with context and reminds his clients of when they first began talking about selling their homes. Typically, the process started several months prior.
“I typically take them back to how we got here.”
“I typically take them back to how we got here,” Sean says. It’s important to paint an accurate picture of where the market was and where it is currently, pointing out just how much has changed since the process began.
How to Have the Conversation With Your Client
Let’s say you started the conversation with your client back in March, then took a month or so to spruce up the home, invested time into staging, photography, and pre-marketing, and then finally got the listing active in June or July.
“And in that time, the interest rates changed and raised; over the past 30 days, we’ve had 25 showings; we discussed adjusting for the market. You were hesitant to adjust at that time, and now the market has shifted,” Sean says.
It’s imperative that your clients understand how much the market has changed since you first started this process.
The Close Recommends
Having the conversation about reducing your price is tricky, and you want to make sure you’re fully prepared with all the latest information about what’s happening in your market. Elevate’s integrated comparative market analysis (CMA) wizard will help you easily stay on top of the latest market trends, comps, and anything that might impact the sale of your client’s home.
2. The Hero, the Victim & the Villain
“Anytime you’re telling a story, there’s a hero, there’s a victim, and there’s a villain,” Sean explains. If your sellers are mad, they’re going to try to make you the villain.
Sellers are naturally emotional and looking for someone to blame for their anger, disappointment, and fear. But Sean has a strategy for reframing this idea and taking that blame off of you as the agent who’s trying to help.
Reframe the Seller’s Mindset
“This is the secret weapon: The heroes are the sellers who are heeding your advice. The villain is the market. And the victims are the sellers who don’t listen,” Sean explains.
When you show it’s not your marketing efforts but the market that’s shifted, and everyone’s experiencing the same slowdown, that takes the pressure off of you and places it where it should be–on the market.
So, don’t let your sellers turn you into the villain and themselves into the victim. Show your clients how to be heroes.
Script to Use Around Mid-week to Get Your Clients in the Right Mindset for a Price Reduction Conversation:
Hi (seller first name), it’s (your first name). How are you?
[Wait for their response. Ask them questions to get them engaged.]
Hey, listen, I think if we don’t have an acceptable offer by Monday, I’d like to have a conversation with you about the market. Will 5:00 p.m. on Monday work for you?
[Wait for their response. If they say “yes,” book the call.]
[If they start to ask questions or want more information, answer with:]
Let’s just wait and see what happens over the weekend. But if things don’t turn around, I want to take a closer look at what’s happening in the market. So, will 5:00 work? Or is 6:00 better?
[Wait for a response. Repeat the previous statement if he/she continues to give pushback. Book the call.]
3. Be Bold
Don’t be timid when you suggest a price reduction. If you believe that slashing the selling price will make all the difference, then go big. The way Sean explains it, a typical price reduction in real estate is $5,000 to $10,000. But if you have an average-priced listing, then your reduction will equate to only about 1% to 2%.
“Yeah, nobody’s running to the store for a 1% off sale,” Sean laughs.
Stand Out With Bolder Numbers
If you want to make a meaningful price reduction, do the math. Reduce the price by a minimum of 5%. That will create a more substantial price reduction that should get people in the door, increasing your chances of finding the right buyer for the home. Otherwise, you’ll end up chasing down the market, always behind the most recent price point.
4. Sell Them on the Second Number
When you’re ready to present the higher price reduction, you can expect to get some pushback. But Sean has a great way to address those objections. Sell your clients on the middle ground instead.
Use the Rejection-Retreat Strategy
When you need to have the price reduction conversation, give your clients a much higher number first. Sean explains when he needs his clients to be OK with a $25,000 reduction, he’ll first go to his clients and ask for a price cut that’s around twice that amount. Typically his clients settle on the number he actually believes they should choose.
Price Reduction Conversation Script:
Hi (seller first name), it’s (your name). I wanted to have a conversation with you about what’s happening with the current market and how that’s affecting your home sale.
We began this journey back in (month you first started talking about the listing). Well, we talked about your plans to sell and why. You told me your number one goal was (their primary reason for selling), and I’m committed to helping you reach that goal.
When we first sat down to discuss your plans back in (month), the market was (what was the market like when you first started). But today, the market is different.
I think we need to re-evaluate our strategy and make sure we’re doing what we need to do to get in front of the right people, right?
[Wait for them to respond affirmatively.]
I’ve been doing my research. The market has slowed substantially just in the past few weeks due to (whatever has caused the retraction, including interest rate escalation, mortgage rates doubling, new construction, etc.).
Right now, you can get ahead of this situation and drop the asking price of your home so that buyers are more likely to see your home, make an offer, and go under contract to get your home sold.
[Wait for them to process this information. They may have some pushback. But most likely, they’re waiting for the reduction you propose.]
(Seller first name), I think a 10% price reduction will make your home more competitive in the current market. (Tell them what that price is.)
[Wait for them to respond. They may give you a lot of pushback. Let them vent, emote, and process this information without you saying anything. Give them a little time to go through this process. Remember, they need time to process their immediate emotions.]
[When they tell you they can’t reduce the price by 10%, respond with:]
OK. I understand how you feel. What price do you feel comfortable with?
[Let them respond with the number they want. It probably won’t be low enough. Your role now is to negotiate to the 5% price reduction.]
OK. I think we’ve arrived at an agreeable price point. I’ll make the change to the listing tonight. You’ll probably see a difference in the number of showings you get for your home starting tomorrow.
5. No One Likes Surprises
One approach Sean uses to soften the conversation is he gives his clients a heads-up days in advance. Sean calls his clients on Thursday or Friday, which gives them time to prepare and sets their mindset for Monday.
“Let them emote over the weekend, stress out, cuss you out,” Sean explains. “Let them get their defenses ready.”
Let Your Clients Decompress Ahead of Time
By the time Sean talks to his clients on Monday, they will be more prepared for the conversation and also more accepting of Sean’s suggestions. Giving your clients some time to pre-process bad news helps everyone involved.
Script to Use Around Mid-week to Get Your Clients in the Right Mindset for a Price Reduction Conversation:
Hi (seller first name), it’s (your first name).
Hey, listen, I think if we don’t have an offer on your listing by Monday, I’d like to have a conversation about the market. Will 5:00 p.m. on Monday work for you?
[Wait for their response. If they say “yes,” book the call.]
[If they start to ask questions or want more information, answer with:]
Let’s just wait and see what happens over the weekend. But if things don’t turn around, I want to take a closer look at what’s happening in the market. So, will 5:00 work? Or is 6:00 better?
[Wait for a response. Repeat the previous statement if he/she continues to give pushback. Book the call.]
“My job isn’t to get you the most money for your house. It’s to get you what you want.”
6. Focus on Their Goal
Remind your client of their own goals. As Sean puts it, his job “isn’t to get you the most money for your house. It’s to get you what you want.”
When you originally sat down with your client, you most likely asked them the question, “What is your priority goal?” Now is the time to go back to that priority.
Stay Focused on Their Priorities
Sean reminds his clients of what their goal is and reframes the conversation around getting them to that end.
“So if you want to be in Florida before the winter, I can make that happen. But what I can’t make happen is you getting to Florida by the winter and getting $800,000 for your home,” he says.
“If anything, during these times, you have to communicate more.”
7. Don’t Be Mad at Me
Managing expectations will help mitigate any negative feelings your clients may have in the long run. It’s your responsibility to level with them and give them the opportunity to make a fully informed decision.
Have Conversations Early
Sean says he strives to have these uncomfortable conversations with his clients as early as possible. “I say, look, my concern is that if we don’t have these conversations now, in 30 or 60 days, you’re going to be mad at me. And you’re going to blame me for the fact that your house didn’t sell. And if I didn’t have these conversations with you, then it would be my fault.”
8. Don’t Fall in Love With the House (or the Sellers)
“Don’t fall in love with the house,” Sean advises. “Just like the seller, you’re emotionally attached to either their story or the house. And that will influence your objectiveness on the price.”
Keep a Healthy Distance
It’s difficult to remain objective when you let yourself get too emotionally invested in the outcome of your sellers and their listing. Some of the best advice I ever received was, Don’t become part of the transaction. It’s so important to keep that objectivity with your clients.
Objection Handlers:
You’re just trying to lower my sales price so you can get an easy sale/you’re not great at marketing/you’re not a good salesperson/you’re afraid you can’t get what we want, etc.
(Seller’s name), I absolutely want you to get the best price for your home. I want you to get (whatever dollar amount he/she wants) for your home. And I’m going to fight to get that for you. But the market is going to do what it does and it may not allow that to happen.
You said you could get ($XXXX) for my home. You said you could get us what we wanted.
(Seller’s name), I understand how upsetting this situation is. And I’m doing what I can to get you what you want. But you said the primary goal for selling your home was (whatever their primary goal is). Has that changed? My job is to help you reach your goal and I can make (primary goal) happen, but I can’t get you (primary goal) and sell your house at a price the market doesn’t support.
[It’s important to understand these objections are 100% emotional responses. They are directed at you because you’re the person standing there. Try not to take these statements personally. Your main goal is to help them work through these emotions and objections without seeing you as the bad guy. You’re there to guide them through the process and help them reach their goals.]
Your Take
At the end of the day, having the price reduction conversation is difficult, but it’s truly the best way to serve your clients in an ever-changing market. No one wants to chase the market down. Be honest and upfront with your clients, and they’ll appreciate your integrity and sincerity.
Have you had to have this conversation with your sellers? How have you handled it? Did you handle it differently than the way Sean suggested? There’s no one right way to handle these delicate conversations with clients. We would love to hear your best ideas. Share some in the comments, and let’s all learn from each other.
Tell us about you so we know what to send.
Add comment