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,...
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, 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...
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?...
Are you doing a weekly call to all your sellers? If you haven't started doing this, this is something you need to be doing. And as you take new listings, you need to just create this expectation that you're going to call them every week.
My preference is on Monday. I want to get the week started off right. And having my Monday morning power hour, where I call sellers, is super important in my business plan.
So why do we make calls to our sellers every Monday?
Because we need to earn the right to be able to ask for price adjustments, condition improvements, or incentives if they're needed in order to get the property sold.
The market's changing and not every single listing you bring to the market is going to sell instantaneously anymore. Often we're going to have to make some adjustments in the condition, price, or incentives we're offering.
Here's how you handle that conversation with the seller:
I'm going to start by saying, "Hey,...
As we begin to price property, it's important to understand the difference between comp-based pricing and competitive-based pricing.
Comp-based pricing is what REALTORS typically do when they do a CMA, they do a comp based pricing analysis. What they do is they look at properties that have sold three to six months ago, very similar to what an appraiser does. And normally in a typical market, that's very effective. But we're not in a typical market.
When you're doing that today, you could have an inherent flaw in your data. And here's what it is:
Back in April and May, all indications point to the fact that we probably hit our apex point of the market. Meaning that home sales were indicating at 23-26% appreciation rate compared to the year before. So that was the peak acceleration of our markets.
Since then, we've been moderating. And what that means is that people aren't getting 23-26% compared to a year ago. Now it's down to about...
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....
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