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...
What is the meaning of measuring market intensity and why does it matter?
Market intensity is an interesting way to look at the market. I was given this idea by my friend, Lennox Scott. So when we look at market intensity, the way we measure it is by how fast listings are going pending the first 30 days they hit the market. So if we go back in time and look a year ago in a lot of markets across the country, when you look at how many listings were going pending in the first 30 days, it was like 80%, 85%, 90% of listings were going pending at that point.
Fast forward to today: What's that market intensity reading? I'll tell you what mine is. For the last two weeks, in my local market that number is 60%. 60% of listings are going pending in the first 30 days.
It's still a high number. It's a lot, but it's not 80%. It's not 85%.
So that market intensity comes down a few notches, and that's the conversation we need to be...
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...
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....
Hey guys, the market is shifting. If you can feel it in your market, you're not alone. One study that's backing this up is a study that's just been done by realtor.com. It shows that of the top 300 Metro markets in the country, 45 are seeing significant price adjustments happening.
I'll give you a couple examples:
Des Moine, Iowa — 32% of the listings have had a price adjustment
Midland, Texas — 28% of listings have had a price adjustment
Toledo, Ohio — 26% of listings have had a price adjustment
Metairie, Louisiana — 24% of listings have had a price adjustment
Where I live, Portland, Oregon — 20% of listings have had a price adjustment.
So not every market's having this yet. But we're certainly seeing sellers starting to be wise to the fact that buyers aren't just going to pay infinity anymore. There is buyer resistance to pricing. We've seen the largest run-up in pricing. Prices have hit an all-time...
Are you having pricing conversations with your sellers?
The number one reason why a home will sell or won't is the price. As the market transitions it's important that sellers understand that the price is their ultimate marketing tool.
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In our changing marketing landscape we must adapt our strategy, our sales language, and our approach to advising and consulting with buyer and sellers to ensure they make informed decisions.
In a traditional market with the normal seasonality of a stronger selling season in the spring and summer and a slower selling season in the fall in winter - many sellers will consider taking their house off the market during the winter, and many buyers may wait for more inventory to arrive in the typical spring and summer surge.
We are not in a traditional market. The market today is undergoing a transition, a normalization which in many areas means more inventory is quickly flooding back into your local MLS.
Watch and learn how to coach your clients (buyers and sellers) on why buying a home now is a great idea and why keeping their home on the market is a smart strategic decision.
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