Pricing a Home

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Anthony: Pricing a home. Pricing a home correctly, one of the most important things, or arguably the most important thing to selling a listing. Anthony Lamacchia here with Crush It In Real Estate. This is take two. The first one, the live, got screwed up. I want to talk to you about how to make sure that you are pricing your listings correctly. Over the last two years, two and a half years, even if you didn’t price correctly, you could likely get away with it if your price was even 5% or 10% over because prices were just going up rapidly. Prices were going up so much.

There were so much demand, so little supply that homes were selling anyway, and in some cases, you even look bad to a seller when you tried to get them down to earth with a price what you thought was down to earth, and then it would sell for more, and you’re like, “Oh my God, what am I doing here? I can’t believe it’s sold for more than I thought.” That’s because we were in a market that was going up rapidly. Prices were going up at a rate that we haven’t seen in many, many, many years. That is over folks. It is over. That game is done. You want to show this video to your home sellers? Go ahead. I don’t care.

You have to get back to the basic fundamentals of pricing and working with a seller to price a home correctly. If you do not, mark my words, I guarantee you within 60 days, by the middle to late October, you’re going to go, “Oh my God, I should have listened to Anthony. I’ve got three listings that aren’t selling. I have two sellers that are mad at me.” Folks, here’s the truth about real estate. Us, realtors, we get more credit than we deserve when a home sells fast and we get more blame than we deserve when a home doesn’t sell. That’s just a fact. It’s the way it is.

In the last two years, we were heroes to those that were working with sellers. Over the next two, if you don’t do two things correctly, we will be zeroes. It’s just the way it goes. It’s just a difficult thing. I want to just go through some reminders here of some of the things that you have to do when pricing a home. Number one, make sure you pull the right comparative properties. Right now, only bringing sold statistics over the last 90 days is not the right properties. You can bring those, but you also have to bring actives, you have to bring pending properties that recently went pending, and you have to show them what’s going on.

If you only show sold properties over the last 90 days, you’re going to give the sellers a false sense of what’s going on because most of those sales were negotiated back in the spring and even late winter when inventory was lower and interest rates were two points lower. Very, very important. Number one, bring the correct comps, active comps, sold comps, new pending comps, et cetera. That’s key. That’s number one.

Number two, make sure you are doing all the fundamentals that you should be doing to warm the seller up before you arrive. You don’t just book an appointment and then do nothing from the time that you call to the time you get in front of the seller because you’re not going to warm them up enough. You have to make sure they are very, very warmed up and their rapport is high as possible because then they’re much more likely to listen to you.

Number three, take time when going over pricing. Over the last two years, you could just simply go over pricing quickly, and if the seller wanted to price 5% or 10% higher than you thought it wasn’t a big deal, you could still sign the listing, list the home, and sell the home. That is over folks. It’s done. It’s over. It’s behind us. I’ll tell you, it’s behind us for at least five years. Mark my words. It’s at least five years behind us.

Honestly, I don’t know if we’ll see that even in the next 10 or 15 years. See such an incredible amount of demand in such a low amount of supply. To the extent that we just saw it over the last two years, we won’t see that for at least another decade, but even a smaller version of that, I don’t think we’ll see for the next five years.

Some of the things that I already went over, bringing the correct comps, including recent comps, warming the seller up before you arrive to have the right rapport. Number three, spending time, taking time to really go over pricing with a seller. What I mean by that is if a seller says a high number, which they almost always do when you’re going over comps, take the time to go back over, which comp are you referring to?

Which one of these comparative properties is making you think that we should list over 700,000, Mr. Seller because they’re all between 600 and 700? Look at this one that’s sold for 690 and this one that’s sold for 675 and this one that’s sold for 680, these all went under contract back in April and March and sold this summer. They would have a very hard time getting those prices if they were to list right now.

Those are the first three things. Here’s the fourth, I call it the new part of the listing appointment. You have to bring, you can’t just say it, you can’t just say interest rates have gone up, you need to bring something that actually shows them how they’ve gone up. We have a document that we’ve created that shows what’s happened with interest rates over the last four years. It shows the month, it shows the interest rate, and it shows the average payment based on the average price. No, what the payment would be, principle, and interest based on the average price in that particular market. We have one from Massachusetts, one from New Hampshire, one for Florida, and a national one.

If you want the national one, put your email in the comments here and we’ll email it to you next week. It literally shows the month, it shows the average interest rate at that time, it shows average price, and it does the math on the payment. That way the seller can see with their own eyes, they can actually see because remember they don’t believe everything they hear. They believe what they see.

You show this to them and they go, “Oh, I didn’t realize that. If someone bought my house in the winter, their payment was 2,200 a month. If they buy my house now, their payment is 3,200 a month.” When a seller sees that, it resonates a little better. That’s one thing you’re going to show them and you’re going to bring on the appointment. This is item number four.

The other thing that you’re going to show and you’re going to bring is an on-market snapshot. I want you to show them the difference in how many homes are for sale right now compared to how many homes were for sale when some of those comps went under contract back in February or March or April, and actually show the difference. “Mr. Seller, Mrs. Seller, take a look at this. There’s 22 homes for sale in this town right now. Look at how many homes were for sale back when these comparative properties went under contract. I picked the date of the middle of March since most of these are around then. Look, there were five homes for sale, so we have more than four times the amount of homes to compete with.”

That’s the new part of the listing appointment, folks. Then you’ve got to hold your ground a little bit. You need to say things to the seller like, “Hey, look, I’m not negotiating with you. I’m on your side here. I want to get you the most money, but pricing very high doesn’t get you the most money.” Contrary to popular belief, the higher we go, the less you’re likely to get. That’s another one. That’s another one. Find comps that it’s going to get easier, it’s going to get easier. Stuff that was listed this summer, you’re going to have more of them. As we get into fall, there’s going to be better and better comps. We’re still in this weird period where the last three months of comps are a little bit unrealistic.

Find a comp that listed higher than another comp and ended up selling for less. When you do that and you show that to the seller, it resonates. They tend to go, “Wow. Okay, I didn’t realize that.” “Look at this home, Mr. Seller. They listed at 725. They ended up selling at 675. Look at the seller that listed at 699, they ended up selling at 705. The house is very comparable. Look at the house. Here’s house A, here’s house B. One listed at 699, it sold for 705. One listed for 725, it ended up selling for 675,” if that’s the number I said, but you guys get the point. You need to show them that and they need to see it.

Then take your time on that listing appointment. That extra 10, 15, 20 minutes, that was item 3 that I said, that extra 10, 15, 20 minutes on the appointment, to get them to the right price is key but you can’t come off like you’re arguing with them. Instead of saying, “No, Mr. Seller, no, you should be at this price.” What you say instead is, “Well, Mrs. Seller, tell me which one of these comparative properties is making you think that we should be over 700? Show me. Oh, that one? Okay. I want to point out a couple things about that one. I agree your house is comparable, however, that one was listed in February, went under contract 10 days later, which means they had multiple offers and they sold right away and just didn’t market in the system right away. Let’s take a look at February. Oh, on market Snapchat. All right, look. Actually, there were four homes in the market at that time. Right now we have 22. Let’s pull up the interest rate blog or the interest rate document. In February, interest rates were 3.75%. Today, they’re 5.75.”

Do you guys follow me here? It’s all about data. It’s about showing them. Now, let me keep going. I’m going to go a little further and then I’m going on my run. Next is this. Taking the time, getting the price right, getting them locked down, signed up. As active comps come on in the next few weeks and you’re getting them listed, usually there’s a week or so before people list, you want to send them new properties that are coming on so they can see the competition.

Well, send them the ones that show that your price is right. If there’s a high one, be careful because then they’ll think, “Well, that one’s listed higher.” That’s right. We’re going to sell more because we’re listing at a better price. You need to say to your sellers, “Mr. Seller, we’re not testing the marketing here. All we’re testing is the price. The marketing that I’m going to do is the identical marketing plan that I’ve done over the last two years that brought me multiple offers in multiple home selling over-asking. It’s the same marketing plan. The only difference now is the price. That’s what’s getting tested in the marketplace, not on marketing.

Then you need to be very in touch with your seller. See, we’re getting back to a world that I played in, okay? The world that I played in, actually, that’s not even true. The world that I played in was dramatically more difficult as far as selling listings goes. We’re getting back to a place where you actually need to be in touch with your sellers.

You need to work your listings a little bit, you need to talk to your sellers about feedback and there’s going to be days on market. Now, if you’re listening and you’re like, “Well, I haven’t really had that this summer.” It’s coming. I promise you it’s coming. Get yourself ready. I can see it. The West Coast is further ahead of us on the East Coast, which is typical, saw the same thing in 2006. Things go from west to east, not just the weather.

Get yourself ready, be in touch with your seller. Send them weekly updates. Call them on the telephone and speak to them. “Hey, did you see what I sent you? Did you see those comparative properties? Did you see the feedback? We had seven people in the home. This is what they’re saying. Have you considered a price adjustment?” Around day 10, send them a marketing email. Show them what you’re doing to the market. Work your listing. Be in touch.

I’m going to cut it there. I’m going to do another video in a week or two about how to work the listing once it’s active. What I just went over was getting the price right from the beginning, and that was the purpose of this video. Next one I’ll do, I don’t know if it’ll be the next crush at the video but in a week or two, I’ll spend time on going over the basic fundamentals of what you need to do while a home is listed.

That’s all folks. I need to go on my run and have a busy day. Got about 50 friends that I grew up with and all their kids came over to swim, so it’s going to be a lot of fun. I hope you all have a great day. It’s the last unofficial weekend of summer, or I guess you could say next weekend is but this is close and that’s all. You can see. I got my new Carolina One hat on. They were gracious to give me that when I was down there speaking the other day to a wonderful audience. That’s it, folks. Have a great day.