How do you normalize a price reduction?
People don't wanna feel like they're the only ones reducing their price. And some sellers may not be in tune with the market like we are. They may be assuming that the market's like it was six months ago. And they're the only person that's not selling right now.
Of course, we know that's not true. We know the market's changing. We know there's more inventory hitting the market than we've seen in a long time. We know interest rates are impacting the marketplace.
So how do we normalize a price reduction?
The way you do it is to show others in your market that are also reducing their price at the same time. So here's how you do it.
When you're talking to a seller, you can say:
"Hey, Mr. And Mrs. Seller, you know, we haven't had a lot of showings and that's probably directly to related to our price. We're seeing more competition. Interest rates are definitely...
Hey guys, I'm seeing something in the market that I've never seen before, which is really interesting.
We're seeing a mass migration of people moving from one state to the next because of political reasons.
Now, we haven't seen that. In my 33 years in the industry, I've never seen a mass migration because of political reasons. People are moving because they don't agree with the local politics or the state politics. And they're going to where they agree more with the politics of that other state.
So you might say, well, that's interesting, Jim, but how in the world do I capitalize on? How do I use that in my real estate business?
It's interesting because we all know some folks around us—family and friends—that have actually made the move. So isn't like way out there. This is like close to almost all of us.
So I'm gonna give you a simple technique today that you can implement right now.
We're still in a highly competitive market. There's still lots of multiple offers happening. The market is changing, but there's still high demand out there.
So I want you to think about what can you do to incentivize people to take my offer over maybe a cash offer if my buyer is being financed.
What would be a unique strategy for that?
One unique strategy I found from one of my top producing teams is this:
They use a closing guarantee. Maybe you're already using one, but if you're not check this out, here's what they do:
When they write an offer, they include a closet that says, "Hey, listen, just for accepting our offer and considering us, we're gonna guarantee that we're gonna close it by this specific date. And if we do not close it by that specific date, we're gonna give you a non-refundable earnest money of $10,000, $5,000, $20,000."
By using that closing guarantee, what you're doing is providing clarity to the seller, so they...
Feedback is one of the most important things we can collect on behalf of our sellers in order to adjust prices, adjust terms, adjust condition, and to get that property really tuned up for the marketplace.
So one thing is we gotta make sure we're going out and trying to collect that feedback. And when we do that, I'm gonna ask three questions:
1. Would you think of the price?
2. What did you think of the condition?
3. What did you think of the neighborhood?
Those are my three questions. I'm sending this by text to every showing agent. But I'm gonna also add one more question. My fourth question, which is maybe the most important is:
4. Can you tell me, did they make an offer on another house or did they actually purchase another property and get in contract?
When I do that and I find out that I can actually deliver that by act to my seller and say, "Well, Mr. and Mrs. Seller, here's the feedback. And they went ahead and made an offer...
Hey guys, now that the market's becoming more competitive, one idea to help your sellers be more competitive is to use the "Buyer Eye Strategy."
What's the "Buyer Eye Strategy?"
When you're sitting with the seller and you've just listed to the property, you might say something like this:
"Hey, Mr. And Mrs. Seller, now that we got the property listed, here's what I'm gonna do when I get back to my office. I'm going to treat you guys as if you were a buyer for a property that's very similar to yours. So here's why I'm doing that:
"I'm gonna set you up an MLS on a search pattern that's gonna include your house, but also any other houses that are listed that are similar. This way, you're gonna see everything in real time, every single listing that's happening. Every price reduction, every pending, every closing that's occurring in your price category. And this will really tune you into the market.
"And if you decide, Hey, look at this as a new...
Gary Pickren is a real estate attorney in South Carolina who has closed over 30,000 real estate transactions during his 26 year career. As a certified licensed instructor, broker and now a Real Estate Commissioner for the State of SC he brings a wealth of knowledge to the podcast. Gary’s real passion is marketing. He has created BombBomb Vlog with over 4600 subscribers. During this session Gary talks about differentiating in this market and not becoming a commodity. How video has changed his career and how he went from zero to 1 million video email-opens in 2 years! And why his law firm serves its own custom beer at every closing!
One conversation that can come up as you're out there taking listings is, of course, centered on commissions.
And here's a great script to help your sellers look at the commission, not just cost, but as a marketing incentive to encourage showings and to encourage more offers.
So the script kind of goes like this:
"Hey, Mr. And Mrs. Seller, one thing I wanna talk to you about is the commissions that we charge. Now, I charge a listing marketing fee of X [fill in the blank, whatever you're charging]. And all we have to decide now is what we're gonna pay the buyer's agent. Now there's a little secret sauce here that a lot of people don't understand. Which is, that marketing fee that we're paying to the buyer's agent to bring that buyer in can actually incentivize them to show your home.
"Let me show you an example:
"I did a commission survey in your market area where your home is. I went out about a mile two miles, and I looked at every listing that...
There's a new stat out that shows some unprecedented numbers. And the numbers reflect that home buyers entering the market today are paying 39.4% higher mortgage than they did last year at the same time.
Now, why would their mortgage go up almost 40%?
The number one reason?
Also a bit of home price increases as well. But by and large interest rates going up seven of the last eight weeks. They've gone up so fast.
So when we look at this, some of our buyers may be saying, "Hey, let's pump the brakes on me buying."
How do you respond to that? Well, the response should be a reflection on what happens if they don't pull the trigger now and they wait. We know the Fed is already planning to do six more rate hikes this year, starting right now in May.
So as we begin to roll through the rest of the year, it's highly likely these interest rates aren't gonna go lower. They're gonna go much, much higher as the Fed tries to break...
One thing we should all be aware of right now is that a lot of home sellers are reevaluating their price.
And one thing you should be monitoring in your own market area is the number of price adjustments that are occurring every 24 hours. Maybe on your hot sheet, your MLS data sheet, it's gonna show that number. Keep it a close eye on that, and then think about it with your own sellers.
Here's something that's interesting:
In the last few weeks we've seen 3.5% of all the sellers in America reduced their price.
Now that doesn't sound like a lot. But remember, we're coming off one of the hottest real estate streaks we've ever seen in our market.
But the market's starting to cool when it comes to pricing and people are starting to adjust to get ahead of the market. Typically we don't see price adjustments begin to happen at this level until July or August.
So why are sellers starting to adjust prices much, much earlier than ever before?...
I had a real estate coaching student come to me recently and asked me if she should invest her equity of her home into other real estate.
And it's a question she was getting from her clients as well.
So I explained this to her in a story form, so she could explain it to her clients as well.
So let's assume that you had $400,000 in equity in your home. And you leave $200,000 equity in your home and you pull $200,000 out.
Now, how do I pull it out? I refinance it or I get a HELOC loan for that $200,000.
So now I have $200,000. Of course, I'm paying interest on it. It's not free money. Let's assume I'm paying 5.5% interest today.
With that 5.5% interest, I now have to beat that rate of return in order to make money.
So let's assume then I go out and I take that $200,000 and I find an investment property. Maybe it's a duplex or a triplex, and I spent $700,000 on it.
That's reasonable because they gotta put 25% down generally on investment...
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During the call be prepared to discuss - Your goals for the next twelve months. Your time management and priority management strategies. Your willingness to change and adapt to a changing market landscape, and your biggest choke points - what's really holding you back
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