The “Four Price Conversation” That Prevents Your Sellers From Sitting On The Market Without Selling


There are a couple of numbers we need to look at to understand where the market's at and what's happening with the market.

Number one is the pending home sell index, which ​had a decrease of 1.9% compared to a year ago. And again, a 1.9% decrease compared to last month. Coincidentally, it was the same number.

But when we combine that with an increase in inventory of 4.1% the month before and a decrease in interest rates because they fell back below 3%.

So we have to look at this as the whole and say:

Why would there be a decrease in sales when we've had an increase in listings and a lower interest rate?

Why aren't buyers saying, "Hey, I have more to choose from and my interest rates are going down. Why don't I own the market?"

Buyers aren't doing that. In fact, they're pulling back a little bit from the market.

The reason is...

Buyer price resistance

Buyers are saying, "Hey, it's been 112 straight months of home price increases. We've had a 23% increase in what we were going to pay for the same home from a year ago to today."

That's how much home prices have gone up across America. Some much more, some little lower, but overall 23%.

Buyers are saying, "Hey, we're going to put the breaks on this. We're not going to pay infinity pricing."

So what we need to do as REALTORS is we need to understand that we're gonna see something in the market that we haven't seen in years, which is pricing pressure.

Buyers are going to want these prices to come down or at least stabilize. So because of that, we've got to learn how to have better pricing conversations with our sellers. Because what we don't want to have is one of our sellers set in the market and not sell.

So I like to use the "Four Price Conversation" when I'm sitting with a seller. So here's the "Four Price Conversation" I'll say:

"Hey, so you know, we're in a rapid market. Things are definitely moving fast, but I do like to point out to sellers that there are four times we're going to have to sell your property. And it's not just to the buyer. So the first time we have to sell your property and sell the price is really to the market — to all the REALTORS in the market. Because if they don't believe in our price, they're not going to come show the house. So, number one, I've got to get them out here and believing in the price and what we're doing here.

Second, we got to find that buyer, that unique buyer, that's going to write you an offer that's going to be acceptable to you. So that's the second time we got to sell the house.

Third time we got to sell the house is to the appraiser. Make sure they believe in the price.

And the fourth time we got to sell the house is to the underwriter, which is the bank who's actually going to write the check.

So I've got four levels of sales. And based on that, I can't just use subjective like PFA. I can't pull from the air what I want to just ask for the property. We have to actually use it on objective criteria. Meaning, we've got to look at comparable sales in the marketplace. Because what we don't want to do is be like your neighbor down here who's been in the market for three months and still hasn't sold. They reduced the price twice, they're chasing the market down, and they've just been stigmatized by the market. There's a difference between listing the property like they did and getting the property sold. So let's have a conversation around that."

Now that's where I'm going to lay the groundwork for my sellers.

The next thing I'm going to do is really get deep into my CMA. And I'm going to have a of tools to do that. Some of you use Some of you use Cloud CMA, and a lot of other programs out there to help you be an expert. But make sure you understand those programs in depth.

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