Tips To Help With Getting Price Reductions.

By
Real Estate Broker/Owner with Bryant Tutas-Tutas Towne Realty, Inc BK607690

belizeHi folks. Here’s some info that may help you with getting price reductions for your listings. I first posted this back in October 2006.

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Price reductions. I love ’em and I hate ’em. I seem to have mixed emotions about them. If “The Lovely Wife” is reading this, she will be shocked that I even wrote the word, emotions. Emotions and having them are not my strong suit. Price reductions. I love them, because this is what is needed, to get my properties sold. I hate them, because in my own mind, I am an expert on pricing and should have priced the home properly to begin with.

But you know, in this more difficult market, with rapidly changing property values, I have found myself asking for and getting more and more price reductions. Over the last couple of weeks, I have reduced the asking price on 8 of my current listings. Even though they were already “priced right” and were showing up as the lowest priced properties in their category, they still were not selling. Maybe, I’m just being impatient. I was spoiled, the last couple of years, with my listings selling in a week or two and now I have several listings that have been on the market for over 2 months. So what do you do? You reduce the price. Anything will sell if the price is right.

I know, some will say, “But Broker Bryant, if it’s priced right, just wait, a Buyer will come along. Why should the Seller have to give away their hard earned equity? ”Well, in my market, Poinciana Fl, I see values coming down. Not only coming down but coming down rapidly. Homes, I could easily have sold for $200,000 a year ago, are now sitting on the market, priced at $179,000 (This was late 2006 pricing. Now, 2012, it’s $64,000!). Not only are they not selling but it is difficult to get showings. Since, I can’t predict the future, it is best for my Sellers to sell now. If prices continue to drop, the longer they wait, the less the house could be worth. The reality is, if they have owned it for more than 2 years they probably are in a good equity position anyway. So, my advice to them is, reduce, sell and move on.

I have a few guidelines that I use to trigger a price reduction.

  • No showings in 10 days. Reduce
  • No offers in 30 days. Reduce.
  • Anxious Sellers. Reduce
  • Approaching holidays. Reduce

The best time to talk about price reduction is at the listing table. I let the Sellers know about current market conditions and give them my “triggers” for a price reduction. Every time I talk to them, thereafter, I mention the possibility of needing to reduce. No surprises. They know I am going to ask, if needed. They are prepared for it and ready to take my advice when the time comes. Never make the mistake of underestimating your Sellers. They read the same papers and watch the same news, that we do. They know the market is changing. They want to sell.

There are things you can do to make the Sellers more comfortable with reducing the price of their home. Here’s a short list that you can use.

  • Keep them focused on their reasons for selling.
  • Remind them how much their home has appreciated/depreciated over the last couple of years.
  • Show them this appreciation/depreciation in a percentage. It’s probably more than they think.
  • Remind them that it’s a great time to buy. They can make up some of the reduction on the purchasing side.
  • Remind them that unless they can pick up their house and move it, the market "is what it is" and we have to deal with it.
  • Remind then how cute the grandchildren in Georgia are and how nice it will be when they are closer to them.

Finally, stay optimistic. Let them know you are working for them and will do everything you can to get their home sold.


And then, reduce it. If that doesn’t work, reduce it again and repeat until sold. I hate price reductions. But I hate expired and withdrawn listings even more.
So folks, know your market, make adjustments if necessary, ask for the price reduction. Make it your goal that if your sign goes up, it only comes down on way to the closing.

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Kim Carlson 03/28/2012 08:09 PM
  2. Scott Fogleman 03/29/2012 02:46 AM
  3. Cheryl Ritchie 03/29/2012 04:36 AM
  4. Barbara Martino-Sliva 03/29/2012 04:42 AM
Topic:
Real Estate Best Practices
Location:
Florida Osceola County Kissimmee Poinciana
Groups:
Real Estate Rookie
Tags:
education
price reductions

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Show All Comments
Rainmaker
974,112
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

Bryant, your triggers are right in line with a speaker we listened to last week - only she says that after 10 showings or 30 days, whichever comes first, then lower the price.

Sharon

Mar 28, 2012 09:46 PM #24
Rainmaker
324,013
Inna Ivchenko
Mannis Real Estate Group - Calabasas, CA
Los Angeles / Valley Homes

lol, since you mentioned expireds and withdrown~~ i' d love to know how you treat that.

Also:

if the seller refuse reduce and decides to keep it their way or  rent it out , what rules do you have for that?:))

Mar 28, 2012 09:57 PM #25
Rainmaker
1,835,706
Gabe Sanders
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

May I respectfully add: a comp sells at a lower price - reduce.

Mar 29, 2012 04:00 AM #26
Rainmaker
575,118
Valerie Zinger
House Proud Ottawa-Ontario-Canada - Ottawa, ON
Home Organizer
I loke your list. Gabe's addition is also good. Keeping an eye on the competition throughout the sale to see what the market is saying about prices.
Mar 29, 2012 04:08 AM #27
Rainmaker
1,160,216
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566
Reblogged with this header... I like the mention of ten days reduce. Thirty days reduce. The market speaks. Buyers vote with their feet. No activity means overpriced severely. The market accepts your price when you get showings and offers. No showings and no offers, yep, overpriced.
Mar 29, 2012 04:37 AM #28
Rainer
194,346
Linda Metallo DiBenardo
Re/max Impact, Lockport, Illinois - Lockport, IL

Bryant, I like your trigger list.  I have another trigger for a price reduction.   Showings, but no offers.  You may even have pleasant feedback but if buyers are passing you by, it's time to adjust the price.

Mar 29, 2012 05:36 AM #29
Rainmaker
147,170
Richard and Jean Murphy
Harborview Properties - Portland, ME
(207) 712-4796

Bryant, thanks for the pep talk. Getting ready to have a price reduction conversation with clients who have already moved out and away. Timely post.

Mar 29, 2012 05:40 AM #30
Rainmaker
892,863
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

BB, educating your clients up front with your triggers should alleviate any surprises when you ask for a price reduction.

Mar 29, 2012 05:42 AM #31
Rainmaker
1,087,962
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

Hey guys. thanks for stopping by.

Some sellers will not reduce. Of course the time to figure this out is at time of listing. Get you price reductions in adavance and in writing while you are taking the listing. My short sale listing give me complete authoririty to reduce when i ever I feel necesary. No additoonal paper work needed.

If you find out at time of listing that the seller will not price right and will not be receptive to reducing then you have to decide if there may be other reasons for taking the listing besides seling it. I have a listing right now that I have had on the market for over 2 years. It's overpriced. I know it and the seller knows it.  The seller is in no hurry and is just testing the market. I had him sign off at time of listing that the property is overpriced, will not sell and that I took the listing with the sole purpose of getting my sign in that particular neighborhood. Next month we are closing on our 3rd buyer from that listing!

So the test can be not can I sell it at that price but can I make money off of that listing. Of course you MUST make sure the seller fully understands the situation. Giving sellers false hope is about the worse thing we can do.

Mar 29, 2012 06:16 AM #32
Rainmaker
501,015
Lori Cain
Chinowth & Cohen Realtors - Tulsa, OK
Midtown Tulsa Real Estate Top Producer

Really appreciate this post, because I'm starting to ask for price reductions like never before. And you are spot on that the BEST time to discuss them is at the listing presentation!

Mar 29, 2012 06:39 AM #33
Ambassador
1,739,623
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Charles Rutenberg Realty - Palm Harbor, FL
Palm Harbor & Dunedin FL Residential Real Estate

BB - Indeed, if the seller doesn't hear the discussion at the listing table about triggers that will cause a price reduction down the road, it will be a bumpy road! Better to know up front that the seller is going to work with you BEFORE you invest in taking the listing.

If the seller isn't going to work with you, WHY would you take the listing in the first place?

 

 

Mar 29, 2012 07:01 AM #34
Rainmaker
1,249,578
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

I am for getting top dollar where we end up at fair market value...Why would a buyer with or without an agent pay more unless there is a compelling reason....I am all ears to hear that reason.....

Mar 29, 2012 07:24 AM #35
Ambassador
710,820
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Dyersburg Tn Real Estate

I will use this advice when I encourage my sellers to reduce their prices.

Mar 29, 2012 07:50 AM #36
Rainer
20,677
Dominique Britton
GoHomeToAtlanta.com Realty LLC - 678.250.5022 - Buford, GA
Experience the Difference in Real Estate Services

Thanks for sharing your triggers Bryant. These are definitely great talking points at the listing presentation up front, so the Seller is not surprised and will not present objections when a price reduction is necessary.

Mar 29, 2012 08:55 AM #37
Rainmaker
162,748
Reba Haas
Team Reba of RE/MAX Metro Eastside www.TeamReba.com - Bellevue, WA
Team Reba, CDPE

If you don't have a motivated seller and they're just "testing the market" you'll not be successful. We've stopped talking to prospective sellers who tell us this phrase. A good listing presentation and follow up should always include what the FULL marketing plan will be including lowest allowable price and when pricing reductions will occur throughout the listing period.

Mar 29, 2012 09:14 AM #38
Rainmaker
1,087,962
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

That house in my article is in Belize. TLW took the picture last week. There were a whole bunck of them that looked just like that. We forget sometimes how good we have it.

Mar 29, 2012 11:34 AM #39
Rainmaker
960,720
Adrian Willanger
206 909-7536 TheHomeFunnel.com - Seattle, WA
Profit from my two decades of experience

Bryant-sounds like you practice one of the most important things a agent can do with their selling clients, communicate. Without great communication it would make the job much harder. I also like the tips about keeping the client focused on end goals. 

Mar 29, 2012 12:29 PM #40
Rainmaker
446,008
Kathy Stoltman
Rockwood Realty - Ventura, CA
Ventura County Real Estate Consultant 805-746-1793

Great post Bryant.  I suppose I shouldn't be, but I am surprised at how rapidly your prices are declining, just fuels the fire more for a good price adjustment.

Mar 29, 2012 04:45 PM #41
Rainmaker
171,096
Jack O'Neal
Solutions Real Estate - Phoenix, AZ
High Touch High Tech

If we have had no showings and the feed back says the price is high maybe MR Seller, we should reduce the price.

Mar 30, 2012 12:39 PM #42
Rainmaker
1,360,865
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

All good points we have it built into our contracts to reduce every 30 days by 10% we seem to stay ahead of the market with a DOM of 43 days.

Mar 31, 2012 09:45 AM #43
Show All Comments
Rainmaker
1,087,962

Bryant Tutas

Broker/REALTOR, Tutas Towne Realty, Inc
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