“So, did you say you wanted more Wiggle Room?”
Earlier this week I had the opportunity to speak at the West Virginia Association of REALTORS® state convention along with two great friends and fellow CRS instructors, Frank Serio and James Nellis. James was telling Frank and me about a new way some of the top REALTORS® are presenting prices—with some remarkable results. This blog, “So, did you say you wanted more Wiggle Room?,” is a result of that fascinating dinner conversation.
Introduction
Pricing property in a buyer’s market is a challenge for most REALTORS® and distressing for most sellers. It seems logical that prices should start as high as possible to allow some room for negotiating, and in a seller’s market this usually works. After all, in a seller’s market, prices are going up, and there are more people who want to buy than sell, so buyers will pay a higher price. However, in a buyer’s market, there are a number of similar properties that could be on the market at a lower price, so overpricing in such a market can be a disaster. Buyers know prices, as do REALTORS®, so if the price is the least bit too high, it turns off many would-be buyers.
The “Wiggle Room” technique as outlined below can be very effective if presented correctly because it’s based on the reality of the marketplace and can help a homeowner choose the right price based on their motivations.
The 3-Price Technique
The Right Price:
REALTOR®: “In analyzing properties comparable to yours that have sold in the past 12 months and reviewing those that are on the market now, we are convinced that the Right Price for this home is at the top end of that range. We feel certain that if the property was on the market today at $195,000, we would see an offer within six weeks that could be full price or certainly within 5 percent of that price. However, if homes similar to yours became available at a lower price, it could keep your home from selling for a longer period of time.”
Seller: “I understand and agree with you that this could be the Right Price, but we would like to have a little Wiggle Room so we could negotiate. Could you put it on the market for $210,000?”
Wiggle Room Pricing:
REALTOR®: “Having a little Wiggle Room seems like a very logical way to price a property, and it’s worked very effectively in the past. However, buyers today are very well-educated about price because of information readily available on the internet. 90% of buyers search these sources before making a decision about what to buy, and if a property is the least bit overpriced, they just don’t want to look at it. Having a little Wiggle Room can be a real obstacle to getting your home sold in a reasonable time for an acceptable price.”
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The Worry Price:REALTOR®: “When we were talking last week, you mentioned not wanting a long, drawn-out sales process and that
you wanted to move within the next four months. As a result of that conversation, we’ve calculated what we call a Worry Price. A Worry Price is a price that is so good that any prospect looking at the property will be worried that someone else will buy it if they don’t snap it up. We are convinced that if you put this property on the market for $188,000, not only would you get a quicker sale and move out time, but you may also get multiple offers—which could lead to an even higher price.”
Selling a home in a buyer’s market can be a very stressful situation. However, stress can be reduced considerably by using logical techniques to help a homeowner understand the wisdom of selecting a price that will encourage a potential buyer to look at the property. Choosing a Wiggle Room price will not only impede the sale but may in fact cause the final sales price to fall below what would have been the Right Price. Also, keep in mind that the Worry Price technique could work very well in counseling a homeowner regarding a potential short sale. The wrong price not only prevents a sale, but without a sale, most short-sale-qualified properties end up as a foreclosure. Hopefully this technique will be another tool to help you and your clients successfully manage this buyer’s market!
This blog is written at the request of many readers and rightfully so, given the fact that approximately 50% of all listing expire unsold, and it only stands to reason that most salespeople will have one or more of these properties to sell. Ancient listings (120 days OTM) and expired listing are in the same “marketing” category because they suffer the same fate of having been rejected by buyers in the market.
It is a fact that in order to make the right decision you first must have enough of the right information. It is no different when selling your house, buying a car, planning a vacation or choosing a career. In this Age of Electronics, much of the information exchange takes place in a non-personal way on the Internet long before there has been a face to face meeting. Having an informative website with adequate information about the HOME SELLING PROCESS and how it works will be an asset to customers in making the right decision and to the salesperson in dealing with an informed customer. I am convinced most sellers don’t intentionally try to wreck the sale of their largest investment by being stubborn, stonewalling or refusing reasonable offers, but instead say NO when they don’t know what else to say. Negotiating and counseling are endless activities that define the outcome of the sales process more than any other activities.