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If you have been in any number of meetings with sellers hoping to sell, you will have encountered at least one of the following objections to the list price you are recommending. It is the same in every meeting – you show up with your carefully crafted CMA (Comparative Market Analysis) and, once you give the sellers your projected list price, they respond with, “But __________.”
Even with current record-breaking prices, many sellers are hoping for more. Here are our scripts for handling the top seven pricing objections.
Objection 1: ‘Zillow says my house is worth $____________.’
I have already covered much of this objection in a previous post, so will be brief here. We anticipate that the sellers have already looked at a minimum of one internet valuation and so we proactively head this conversation off before the seller has a chance to bring it up on their own. We pull the AVM numbers from 4 major real estate portals (typically Zillow, Realtor.com, Redfin and Homes.com) and put them into a separate sheet we use as a part of our CMA package.
We then use the following script:
“I’m guessing you’ve had a chance to look at your possible home valuation on a site like Zillow – I have anticipated that and have provided you with valuations from 4 major real estate websites. As you can see, the values vary from site to site, so we cannot use an online AVM in setting a realistic price for your home.
As you know I was not able to view the inside of your home before visiting in person, so I took the liberty of producing a Comparative Market Analysis that shows similar properties currently on the market and comparable recent sales. This will give you an accurate idea of current market values and provide a range at which we could list your home for sale.
Keep in mind a few very important details: First, this represents a value for today only – your home’s value may change up or down depending on market activity between now and when we list your home on the market.
Second, these numbers do not factor in your current property condition. Depending on your amenities and any upgrades or repairs you choose to do, your value could change significantly.
Third, we will redo this market analysis the day before we go on the market to make sure we factor in any upgrades or repairs and the current market as of the time we list.”
Objection 2: ‘Another agent said they could get $_________ for my house.’
Since we know that we are competing with other agents for a listing, we prepare for this upfront as well.
Here is the script we use if this objection comes up:
“You may have had someone else tell you what they think your home could sell for – to be honest, they are guessing. Some agents will actually tell you an artificially high price at which they will sell your home to ‘buy’ your listing, and then reduce the price when there are no takers.
Personally, I believe this practice is deceptive and will actually net you less than if you list at the correct price to begin with. Neither you nor I control the price at which your home will sell. It is determined by three things: its condition, market dynamics and which buyers are actually looking when your home goes live on the market.
Your final price will be determined by how much a prospective buyer is willing to pay to make sure they get your home. Our goal is to maximize your home’s potential and do the level of marketing required to get you the absolute highest price once we go on the market. Is that OK with you?”
Objection 3: ‘Let’s start high and come down if needed.’
Even in this overheated market, we find sellers who want to start at a ridiculously high price. Although there is limited inventory, homes that are priced too high will not get appropriate offers. Buyers, looking at the price and understanding that in many markets, the list price is simply the beginning and will go higher in multiple offers, cannot imagine adding more to an already artificially high price.
When no offers appear and the seller finally concedes that the list price needs to come down to reality, the damage has already been done.
Here is our script:
“The reality is simple – you can list your home for any price you wish. I have a simple question for you, however – do you want to sell your home or your neighbor’s home?
Today’s buyers are extremely educated: they not only look at all the homes in their price range they check the AVM pricing on the front page of every listing. They can tell if a home is priced too high and will migrate towards properties they believe represent the best value.
Additionally, if your property remains on the market longer than other comparable homes, buyers will assume something is wrong with your home and, after you lower your price, will offer less than you could have received had you priced it right to begin with.”
Objection 4: ‘The market is HOT — let’s be aggressive.’
While close to Objection #4, the idea in these seller’s minds is that, during an inventory crisis, a buyer will pay an over-market price simply to get a property. While true in some cases, those high sale prices usually come to homes that were properly priced to begin with and then had the price bid up by multiple offers.
As explained in Objection #3, if a buyer believes a price is too high, they will not make offers. In fact, in most cases, they will not even visit. They will often assume the seller is either unrealistic or unreasonable and will pass by overpriced properties. Here is our script:
“There is something else you need to be aware of – it’s called the Golden Window and it is the first 14 days the home is on the market. You stand your best chance of getting your highest and best offer during this window. Once you get outside the window, your listing can become stale and buyers will no longer be willing to pay top price.”
Objection 5: ‘We need to add the cost of our remodeling to the price.’
Some sellers have an overinflated idea of the value of their improvements. I have encountered buyers who assume that they can get thousands more because they replaced all the doorknobs in the home, slapped on a coat of paint or did a few other minor improvements.
Other sellers may have done extensive upgrades, but they were a while ago and are now dated or the “improvements” are less than stellar – in either case, they will more than likely not recoup their investment. Sellers also have a host of life experiences from events that have happened in their home and may place a higher value on memories a potential buyer will not be privy to. Here is our recommended dialogue:
“The moment you decide to put your home on the market, you need to switch hats from a homeowner to a home seller. Homeowners make emotional decisions based on memories and their long-term investment in the home. Home sellers detach their emotions and make rational decisions based on the available data and comparable properties. While your improvements may have cost $___________, we can only add values based on how your home compares to others in the area.”
Objection 6: ‘My neighbor’s home sold for more than your recommended price.’
This one is tricky because you will most likely need to contradict the seller in some way. They may have seen a home close by that sold for significantly more but fail to understand the reasons behind the sale: it may have been larger, the condition might have been better or it could have had amenities lacking in the current home.
We preemptively prepare for this scenario by downloading a comprehensive list of homes that have sold within walking distance or in the same development in the past year. We bring this list with us to the listing appointment and pull it out if required.
We can quickly load the applicable property on our phones to see the listing pictures and property details. We can then compare their home to the property they have mentioned. Armed with this information, the script is as follows:
“While I understand you would like to compare your home to the one you mentioned, as you can see, it is different in the following ways:
Objection 7: ‘We would like to test the market.’
It is important to understand exactly what “Testing the Market” actually means. Wikipedia defines it thus: “A test market, in the field of business and marketing, is a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out.” I dealt with this in a previous post, so will not go into extensive detail here. There are four reasons this is a bad idea:
- Today’s buyers have zero tolerance for artificially high prices.
- All transactions (unless cash) must go through an appraiser.
- Overpriced listings miss the Magic Window.
- Seasoned agents have a low tolerance for over-priced listings.
We recommend the following script:
“’Testing the Market’ is a concept that applies to large companies testing a new product over a wide variety of markets in multiple geographic locations. They have numerous opportunities to modify their product and pricing until they get it right. Once they decide to put their new product on the market, they will do so with a low, introductory price. In contrast, selling a home in today’s market has become very similar to online dating – you only have 7-10 seconds online in which a prospective buyer will decide whether or not to visit your home. First impressions are everything.
Whereas a manufacturer has multiple opportunities to tweak and test their product in multiple markets, when it comes to selling your home, you have One house, One market, One chance. I’d like to make sure you maximize that one opportunity to get the best possible price and terms.”
While there are potentially more objections, these are the ones we have encountered the most over the years. Practice the scripts and you will be prepared to respond whenever one of these objections is voiced.
Carl Medford is the CEO of The Medford Team.