3 Ways to Answer a Client’s Pricing Questions
Everyone involved in the selling of a house wants to get the best possible value for their property. However, it can be frustrating for sellers who do not fully understand the real estate market if their house is listed for less than they had hoped. Keeping your clients informed should be an important part of your sales process as a Realtor. Here are three ways to answer some common questions about the asking price of their property.
1. The Housing Market Fluctuates like the Stock Market
Real estate is a huge investment, so people, of course, want to get the most bang for their buck. Many sellers believe that they should be able to sell their house for the same amount they bought it for, plus the cost of selling it. Unfortunately, it doesn’t always work that way. Explain to your client that the housing market is similar to the stock market. Just as stock prices fluctuate, so too do the values and costs of properties. You have to sell your house for the amount it is currently worth in the market, just as you can’t sell stock for more than it is worth on the stock market. No one will buy it. And the buyers are the party in charge of determining the values of houses because a property is only worth what the buyer is willing to pay. Your client can either list their home for what it is worth in the current housing market, or wait for the market to change.
2. The Price has to Match the House’s Value
Clients tend to place a significant amount of emotional value on their home, which often leads them to estimate the property’s value at higher than it actually might be. Explain to your client that the selling price of a house must be similar to the actual value of the property according to a professional appraisal. You should look at comparable homes in the neighborhood to determine a realistic asking price for a property, as well as the state of the local market. If other homes have qualified for significantly less than your asking price, then banks will be less likely to qualify your home for the loan required for the buyers, and they will likely walk away. Again, the client has the choice of whether to yield to the current housing market in their area or wait for it to change in their favor.
3. Only One out of Four Houses will Sell this Month
Explaining the Rate of Absorption, or how quickly homes are being turned over in a particular area, can be a powerful means of convincing your client that the selling price of their home is heavily controlled by external factors. Most sellers hope to sell their home as quickly as possible. It is therefore important to explain to them that there are generally four months worth of properties on the market at any given time. The probability that their home will sell in a month is about one out of four, or twenty-five percent, compared to the seventy-five percent chance that their home will not sell in a month. To be a part of that twenty-five percent, they must be willing to sell their home for an exceptional value in their location. It is up to them whether they want to hold out for more money, or price their home at fair market value and turn it over more quickly.