How to convince your vendor to drop their price
Many agents would agree that one of the most difficult elements of selling a property is convincing a vendor to lower their price expectations.
While no agent really wants to reduce the price - after all, the higher the price, the higher the commission - sometimes, it's a necessary evil, particularly if the home has been listed at an unrealistic price to begin with.
"Some properties do aim for a premium price, usually just above the agents' appraisal range," says Rebecca Herbst, Sales Manager at Bees Nees City Realty.
"If buyers in the market see value at that price and there is competition for the property, that price can then be achieved - or in a multiple offer situation, even exceeded.
"However if the property is fresh to the market and not receiving any enquiry - or the feedback from buyers after the inspections is at a lower price point, this is when an alternative listing price would be suggested to the owner.
"The aim in changing the price is to create interest and competition so you can ultimately secure a sale."
Sensitive subjectsBut this isn't always taken well by vendors, who not only want the best price for their property but might also take the suggestion personally.
"If an agent just tells an owner they need to drop the price without going into the strategy of why, giving feedback or showing the competition, then owners can be very reluctant to drop.
"Another reason owners may resist is that they would be making a capital loss on the property, should they do so.
"Sometimes they physically just cannot reduce any lower, and we have had owners receive further advice from their accountants or financial advisers that they are not in a position to be able to sell at that level."
While agents need to be careful in their approach to vendors, it's important not to delay it either.
"You should not avoid it - you are not helping your client if they are not informed, and it ends up being even more stressful for them having a property that isn't selling and they cannot move on.
"If handled incorrectly though, you can definitely offend owners, and if they are not comfortable with you and no longer trust your advice, the relationship can be broken and it is unlikely that the desired outcome of a sale at a price they can accept will be achieved."
Herbst says the best approach is to be genuine, honest and upfront, explaining everything in an easy to understand manner, and give evidence as to why you are suggesting the change.
"If even after showing evidence or feedback as to why the price should be changed, the owner still doesn't want to re-position the property, it is really important to go back and re-visit with them about why they are selling, and what it will mean to them if they don't sell at all."
Prevention is better than cureOf course, in an ideal world, the house would be priced right to begin with, eliminating the need to have the difficult conversation with vendors. Doing so can be tricky though, as homeowners tend to value their home based on emotion, rather than the market.
Real Estate Agent Doug Disher says agents need to be honest and upfront at the initial appraisal, to avoid any confusion down the track.
"Begin with honesty about the price," says Disher.
"If you tell them at the outset, and put that in writing, then you can refer back to that when discussing adjustments. Otherwise, they sometimes forget!"
Disher says it's important to provide feedback on the house to support your appraisal, along with market conditions.
But it needs to be the right kind of feedback.
"Feedback should only include numbers through and price average. No ranges of price. A figure that it will sell at.
"You have to be tough with the buyers to get the right figure, because they will be trying not to be confrontational with a price you might not like.
But Disher says to avoid feedback about the property if it refers to something obvious which can't be changed.
"It just makes it look as though you are trying to condition them."
At the end of the day though, the final decision is up to the vendor.
If you do agree to list the property at a price chosen by a vendor who decides against a realistic figure, schedule a weekly meeting to discuss potential price adjustments.
"Tell them you'll be giving them written and verbal feedback on price as you get it
"Be honest with the feedback - if you and they are happy with the feedback it's usually because it's wrong
"If you don't sugar-coat the process, the sellers will respect your advice when the offer comes in. And they will trust you and refer you to their friends."
15 Nov 2019
3 min read
Are your property transactions safe from cybercrime?
The property market is the perfect playground for cybercriminals - large sums of money are constantly being transferred between parties with the majority of communications sent via email.
15 Nov 2019
5 min read
Be careful what you do with confidential information
The recent settlement of a claim between a real estate agency and a former employee serves as a timely reminder to real estate professionals that utilising a former employer's confidential client information can be very costly.