Answering consumers’ pricing misconceptions

This is the second article in a two-part series based on REALTOR® comments gathered by Melanie McLane through her Facebook page.

Pricing a house is one of the issues that most often causes stress between REALTORS® and clients.

Melanie McLane, a 30-year REALTOR® veteran and national real estate instructor, recently asked her colleagues what objections they frequently heard from consumers. A range of issues regarding price topped the list of comments she heard from other REALTORS®.

McLane gives answers to these common price misconceptions:

 “The house across the street sold for $X so mine should be at least that.”

Preparation is key. Before you hear this objection, know the answer. Use courthouse records as well as MLS data and know what has sold, when it sold, if it was an arms-length transaction, what condition the property was in, etc. Know the answers so you can respond, “That’s true. That was 18 months ago when the market was much more robust. Let’s look at some recent sales.” OR “That’s true. That home has 800-square feet more than yours and was extensively remodeled (print the interior photos from the MLS if you have them). This is what your home is competing with today (again, show them what is out there).”

“Our home appraised for $X.”

Depending on who, when and why, that may or may not be a valid appraisal.  It could be old, flawed or an estimate of replacement cost for insurance. Value is what it is worth in today’s market to today’s buyer. If it is an older appraisal, ask the seller to consider having a new appraisal done.

“I heard prices are really up.”

Again know your market. Is this true or wishful thinking? You have to go in armed with the facts: what is the supply and demand in this price range, what the competition is, etc. Don’t be afraid to ask, where did you hear that? If they heard it on national news, remind them that all real estate markets are local.

“We have to get $X for our home.”

There’s no doubt, this comment makes everyone groan. This is a good time to ask them what Plan B is. “So, if you are unable to sell this house for that amount, what is your plan? Are you keeping it?” Take time to be quiet, listen and wait for an answer. Too many REALTORS® don’t make the seller face the possibility of not getting their price. If the seller responds, “We don’t have to sell,” you may consider (silently) not listing the property if they stick to that price.

Over the years, McLane has found if a seller won’t budge on the price they want to list the house for and her market data shows the price is completely unrealistic, she often tells the consumer, “I think I need to be your second REALTOR®. You see, you need to satisfy yourself that you tried your price. I don’t see any evidence you’ll get it. Please list with another agent for six months. When that listing expires and it hasn’t sold at your price, come back to me—I’ll still be here.”

She said over the years many REALTORS® gasp and laugh when she has said this.  “I think humor can defuse many situations,” she said. “You know that if you take an overpriced listing, you get locked into a battle of wills with the seller for the duration of the listing. You constantly urge them to reduce the price; they resist. And when your listing expires, you know they end up listing with another agent at a lower price.”