Do You Have Price Reduction Policy?
A few weeks ago, I listened to a podcast of a prominent real estate consultant. I'll call him Jim. Jim is a very successful real estate broker who typically lists 300-400 properties per year. He also earns a very good living by charging Realtors to help them boost their business.
I enjoy listening to these consultants (and Jim in particular) from time to time because it often will give me some insight on the real estate industry from a broad perspective. A lot of the information deals with the "business" side of real estate and does not really pertain to the "for sale by owner" market.
But one idea really got my attention. It was pointed out that most successful real estate agents have a price reduction policy that is incorporated into their listing agreement with the client. The reason? Realtors only get paid when houses sell. The last thing an agent wants is to have inventory sitting on the market. Every day that passes with inventory that isn't selling is another day without earning a commission. An example of a price reduction policy is: "The listing price will be reduced by 1% every 30 days until the house is under contract" or "The listing price will be reduced by $2,500 after every 12 showings without a contract".
Let's analyze this a bit. As we know, setting an asking price is not an exact science. Market conditions must be taken into consideration. In a slower market, setting your asking price based on comparable properties that have sold in the past may not be indicative of current market conditions. Therefore, adjusting your price to the current market may be what's needed to get the home sold. Smart agents know that the lower the price, the quicker it will sell. I can't tell you how many times Jim stated "Agents don't sell houses - price sells houses".
Having a clearly laid-out plan that addresses how price reductions are going to be handled can take the guesswork out of finding the right price for the current market conditions. When you put your home on the market with For Sale By Owner consider implementing a "price reduction policy" and then stick to it. Search our entire database of current listings
I enjoy listening to these consultants (and Jim in particular) from time to time because it often will give me some insight on the real estate industry from a broad perspective. A lot of the information deals with the "business" side of real estate and does not really pertain to the "for sale by owner" market.
But one idea really got my attention. It was pointed out that most successful real estate agents have a price reduction policy that is incorporated into their listing agreement with the client. The reason? Realtors only get paid when houses sell. The last thing an agent wants is to have inventory sitting on the market. Every day that passes with inventory that isn't selling is another day without earning a commission. An example of a price reduction policy is: "The listing price will be reduced by 1% every 30 days until the house is under contract" or "The listing price will be reduced by $2,500 after every 12 showings without a contract".
Let's analyze this a bit. As we know, setting an asking price is not an exact science. Market conditions must be taken into consideration. In a slower market, setting your asking price based on comparable properties that have sold in the past may not be indicative of current market conditions. Therefore, adjusting your price to the current market may be what's needed to get the home sold. Smart agents know that the lower the price, the quicker it will sell. I can't tell you how many times Jim stated "Agents don't sell houses - price sells houses".
Having a clearly laid-out plan that addresses how price reductions are going to be handled can take the guesswork out of finding the right price for the current market conditions. When you put your home on the market with For Sale By Owner consider implementing a "price reduction policy" and then stick to it. Search our entire database of current listings
1 Comments:
At 11:58 AM, Anonymous said…
very interesting!
incidentally i'm trying to start a blog about the process of selling my condo, and fsbo is the first option i'm going to try, so i'll continue to check this and other relevant blogs!
joe daverin
(http://daverin.com/serendipity/)
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