Use this script to have the "Red Flags" conversation with sellers before you list their house, so they value you as an agent (and don't shift the blame onto you):

"As your real estate agent, I want to discuss a crucial conversation with you, Mr. and Mrs. Seller. When we list your house, one of two things can happen. Either A) we have showings, which means the market is accepting our price. People are viewing the property, and this indicates they believe the price is fair.

Or B) we have very few or no showings, it could be an indication that the price is too high. If that's the case, I'll come to you immediately, and we'll have to make a quick adjustment. We don't want to be one of those listings that sit on the market without any action.

But there's also something else that can happen, a second red flag, other than price: We can have a lot of showings, but no one pulls the trigger and makes an offer.

This could indicate that something is wrong with the property it...

What's more important than the interest rate you're paying on a home?

It's the price you're paying for a home, obviously.

So when we're talking to our potential buyers, this is something we should be talking about with our social audiences, our sphere of influence, our farm areas, and really beating this drum that they need to refocus their attention on this idea that prices are coming down. And we have some real opportunities in the market.

The way we're gonna frame that up is gonna say:

"Hey, listen, a lot of people get really focused on interest rates. But I want you to start looking at price because some smart buyers that I know, some savvy buyers are really starting to get out there and find some incredible bargains. There's really two areas that I like to talk about with all my friends that I think are huge opportunities.

One of them is luxury housing. There's a 38% drop in the last quarter of 2022 in luxury home sales. Biggest drop we've seen since 2014, by the...

Only 16% of buyers believe it's a good time to buy a home today. That's according to a new study from Fannie Mae. So when we hear that number, it's kind of a shocking number and it's a record low. Let's not put any sugar on this. It's not good.

So when we're talking to our clients that may have thought about buying but are on the fence right now, how can we have just an honest conversation about the market today?

Well, I like this idea of a "then versus now" conversation. The "then versus now" conversation is dealing with real world numbers. And so let's assume you have a situation where you say, "Hey listen, I know you're kind of on the fence about buying right now, but I just wanna walk you through something to think about. If you were back in time six months ago when we started talking about buying, and you bought a house back then, let's just run through some numbers. I'm gonna compare that to where we're at today.

So back then, let's assume you were at $450,000....

Hey guys, when we're talking to a seller and we're having this conversation about price—because price is the ultimate marketing tool that we have—sometimes it's hard for sellers to understand the relationship between the price and interest rates.

So I wanna give you some scripting and some dialogues along these lines, which is really important. And it's focusing on the difference in affordability for buyers and really how most buyers are payment focused.

So if I'm sitting with a seller, I might say:

"Now you've probably been hearing that the interest rates have been rising. But I wanna relate that to what that means to a buyer for your home. So the beginning of the year, interest rates were pretty much at 60-year lows or around 3% level. And since the beginning of the year, we've really more than doubled. We're now pushing 7% and we're probably gonna be over 7% very soon.

And so here's what that means:

A buyer that had a 20% down payment and had a $2,500 budget at...

What is an anchor point? And how can it benefit you when you're talking to sellers about getting their prices down?

Well, an anchor point is a way that we can help sellers recognize where they're at relative to the competition of the market. And what's gonna happen to them if they don't take action.

So let me give you an example:

If you have a seller in a neighborhood and you call them and you say:

"Hey, Mr. And Mrs. Johnson, I was hoping I'd have a conversation with you because I did a little research in the neighborhood, and I know we haven't had the activity that I've been hoping for. And so I'm concerned about getting the house sold. So I did some research. I know, you know, the property over on fourth street. It's been sitting in the market for a hundred days. I know you'd drive by it every day.

"And I did a little research on that one. It looks like they started at $600k and now they're down to $550k, but it's still sitting there. It's still stagnant on the m...

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 eroding buyers' buying power. But I wanna share something with you t...

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 listing over here, that's doin...

​​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? It's because they're watching in...

Here's a shocking number:

For every listing in America right now, on average, those sellers, when the listing goes live, are getting 4.8 offers. Let's call it five offers per listing.

It's truly one of the best times in history to put a home on the market, but will this be changing soon?

The answer is yes.

What will change this dynamic is a buyer's ability to afford the house. And what's impacting that right now is interest rates.

Interest rates are rising rapidly, approaching 5% in a lot of markets. And with that, it's pricing a lot of buyers out of the market. And if they're not priced out of the market, it's for them to readjust what they can afford downward. They can't afford that high price because the interest rate won't allow it.

So when we're looking at working with sellers, we need to tell them there's a five alarm fire going on in the real estate industry right now.

And it's interest rates. They're rising so rapidly that they're gonna put a crimp on seller'...

We are in what we might describe as a normalizing market. What does that mean?

We've been in an abnormal market for several years. Our market's been almost a vertical. We've had double digit appreciation for several years. And this has been a run that we've never seen before.

We're about 12 years into a 7-year cycle. So there's an expectation that we're starting to see the markets shift.

A lot of us are seeing a slowdown of showings and energy. And there's some data that backs this up. Here's some of that data:

New listings in the largest 50 metro markets across the country rose 5.1% last month.

And 17.3% of all listings in the country had a price reduction in the last 30 days.

That's in line with pre-pandemic levels, what you would expect in coming into fall. So that's like 2016-2019 levels. Last year, we didn't see that because the market was straight up. It was on a tear.

But right now sellers are starting to say, "Hey, wait a second. I'm not getting the energy, th...