Price Strategies for a Challenged Market – Part 1

I want to thank Beth Butler for again inviting me to share some of my ideas and opinions with EWM’s salesforce. Beth asked if I could share some of my philosophies on pricing strategies in a challenged market. I know we’ve said it before and I will say it again, but the media is killing the South Florida real estate market. Granted the market was set to burst as values rose too quickly, but on the other hand, South Florida is truly a special place on the continent and because of that it should always have a healthy real estate market.

Sometimes when you are in the middle of the forest you can’t see the trees, and I can tell you that South Florida will be back. I am telling everyone everywhere I go that the best buy “dollar for dollar” is South Florida right now. As I travel around North America people are talking about the great opportunities that exist, but buyers are still holding back hoping for the market to continue dropping. The challenge you face now is not having a shortage of listings, but convincing your sellers to price their properties to attract the limited buyer pool. We need to explain to our sellers that all buyers are cautious for a number of reasons:

1. Bad press from a national media perspective

2. Sub-prime negative media

3. Mortgage Fraud negative media

4. Employment figures are down

5.There is a pending Federal election which always brings instability

With all of these factors, buyers are scared and the perception is that “now” is not the right time to buy. This does not negate the fact that some people NEED to sell, and your job as professional salespeople is to find the ones that “need” to and convince them to list at a price that will facilitate a closing. Pricing in this market should be approached as an “objection” and handled as such. You will need more than one strategy to help the seller choose a price that will attract enough attention to cause the property to sell. I have several pricing strategies, but today I will concentrate on “PRICE SENSITIVE POSITIONING”.

The following steps are what would be considered a standard process for overcoming an objection by a seller.

Six Step Objection Handling Process

1. Agree with Them – buyer’s markets ARE tough on sellers

2. Question Them – to better understand their concerns

3. Isolate the Issue – find out if price is the only issue stopping them from listing

4. Handle the Issue – Show them you have a solution to get their home sold

5. Demonstrate it – use the “price sensitive positioning” strategy to convince them to list at the right price.

6. Close – Get the client to agree with you that it’s the right price and move forward

I have attached a diagram of the “Price Sensitive Positioning” strategy for you to review. Basically, the diagram shows sellers that if they price their house “just” in front of their target price range, they will attract twice as many buyers to their property. It also explains that it is better to start at the right price then to require a price reduction. In a declining market, the first home to reposition sells for more than those that follow. If sellers choose a price that is too high, their property will become stale and market shopped and after months on the market any offer they may receive will likely be a low ball offer from people who are trying to capitalize on desperate sellers. Pricing is extremely important – you need to get it right (high enough that the seller does not leave money on the table that belongs to them, yet attractive enough to get the attention of the limited buyers in the market).

Price Sensitive Positioning requires you to do a good CMA/highest price analysis, then have your sellers position their property as the best priced house in the range – this will ensure they catch the attention of the limited buyers. The secret to the success of this technique is to use great visuals – don’t tell someone anything that you can show them with pictures. Show them your CMA first, then take out the picture of the “price sensitive positioning” and show them where they need to price their home to attract the most attention.

Overcoming objections is a matter of pleasantly wearing down someone’s resistance with persistence and with sound dialogues and scripts presented in non-pushy, non-intimidating manner.

Watch for my next blog where I will share my next pricing technique.

Chris Leader
President, Leader’s Edge Training
www.LeadersEdgeTraining.com