The 'Fear Factor' - Winning Meaningful Price Reductions
Updated: Oct 1, 2019
The Fear Factor - Through The Eyes Of An Intern by Ollie Harrison
During my second week as an intern at the Keller Williams Prime Market Centre, London I took part in the ‘The Fear Factor – Winning Meaningful Price Reductions’ and ‘Ignite 7 – Win Buyers and Tenants’sessions. The key takeaways that I got from these sessions are as follows:
Price on Application
Although using ‘POA’ on property listings has been popular in the past, for reasons such as wanting to create intrigue in the property and wanting to make the property feel ‘exclusive’, it can actually backfire and reduce interest for lower priced properties. It can, however, still work for higher priced properties that are low in supply in sought after roads and locations.
Weekly phone call
Scheduling in a weekly phone call with your client is crucial to update them on the sale of their property. Information gathered from Rightmove, such as the amount of people that have seen the property, the amount of people that have clicked on the property, the number of viewings that have been booked, and the amount of offers that have been received are all good pieces of information to share.
Another important part of the weekly phone call should be spent articulating the viewing feedback to clients. When doing thing, don’t use opinions – use only facts.
When you feel that your client, the vendor, needs to reduce the price of their property, you must be as prepared as possible. Think of it as if you are preparing to go to court and that you can’t leave any stone unturned!
Do remember that both agents and clients are fearful of price reductions – agents are fearful of losing the instruction and clients are fearful of not getting the sale price that they were after and previously told that they could achieve. After all, 70% of last year’s sold properties were sold by the second agent, which proves that clients and vendors often change agent.
When delivering feedback and evidence of why you feel that the client should reduce the price of their property, physically printing out the feedback and sharing it with the client is incredibly effective. When the client reads the viewer feedback and the other price reductions in the area, it will ‘hit home’ more than if you were to simply read out a few facts and figures.
Clients often have hope that they will receive a certain asking price, even if it is considerably above the average asking price in the area. You need to remove that hope by using facts and not speaking with emotions.
At the same time, you need to get the client to agree that you’ve done everything in your power when it comes to aspects like marketing by showing them what you have done. Keeping them up to date on a weekly basis with the amount of views, clicks and offers, as was previously discussed, is a good way of ‘drip feeding’ the detailed viewer feedback rather than giving the client all of the information in one go.
Must Sell Vendors
Turning a client who’s not in a rush to sell their property into a must sell vendor is possible through asking questions that they’re not asking of themselves. This may include questions such as:
- ‘If you were to move, what would your next house look like?’ This gets vendors to realise that their future is indeed away from their current house and also may well encourage them to start looking for their future house.
- ‘How dependent is your next purchase upon the ability to sell your current house?’ This can get vendors to realise that they do in fact need to sell their current property in order to afford their next property.
- ‘Do you think mortgage rates will decrease or increase over the next 12-24 months due to the uncertainty of Brexit?’ When the clients responds ‘increase’, explain that this means that as time goes on, fewer and fewer people will be able to afford their property.
- Ask ‘more likely’ and ‘less likely’ questions, such as the question above, to get the client to self-realise various facts.
E + R= O
Events + Response= Outcome
The above equation is the idea that every outcome you experience in life is the result of how you have responded to events.
If you don’t like the outcomes you are getting, there are two choices that you can make:
1. Blame the event Events
This could include blaming the economy, Brexit, a particular client or a whole host of other reasons. Remember, the ‘Events’ section is often filled with events that are out of your control.
2. Change your response
You can instead change how you respond to the events. For example, you can change your thinking or point of view. If a client is blaming the economy, how can you help them to realise that it isn’t just them that is selling their house for less than they would have liked? Can you show them comparables and a range of factual data? If they sell their current house for £100,000 less, does this mean that they can purchase their next property for £100,000 less than the asking price?
Losing an Instruction
There are times when agents feel that they have priced themselves out of the marketplace, by not getting an instruction due to charging 2%. However, during the course of our discussions during the session we came to the conclusion that you didn’t you lose an instruction or a possible instruction due to your fee being too high, you simply didn’t impress the client enough or give enough value.
Stephen Covey, the author of ‘The 7 Habits of Highly Effective People’ defines habits as “the intersection of knowledge, skill and desire.” Our habits consist of knowing what we need to do and why, how we go about doing it and what it is that we want to do.
1. Knowledge (What to do)
2. Skill (How to do)
3. Desire (Want to do)
Our habits influence who we are and Stephen Covey explains that we firstly move from being dependent to independent and we then move from being independent to interdependent.
Various forms of preparation for a meeting with a client can include some or all of:
1. Comparables – house price data in your target/ farming area. This can include current asking prices vs recent sold prices.
2. Newspaper Articles – recent articles that show what is happening to the market place or mortgage rates.
3. Competing properties – as time goes on, add competing properties to a list to show competition in the area.
4. Homes on the market – how many are under offer and what is their price/ sq ft?
5. Rightmove Plus/ Zoopla Pro – data from these websites.
6. Lonres Reports – download as pdf or extract information from them.
In a team environment, if a house isn’t selling for the current asking price, you get a range of agents to write down the price that they feel the property should be listed at to sell it in 7 days. Do this without prompting them at all and see the range of new asking prices that you get!
When it comes to negotiation, even when with a client, don’t underestimate the value of candour and speaking from a place of complete confidence in your facts and figures.
The Home Visit
When preparing for a home visit there are various steps that you can take either prior to or during the meeting:
· Ask the client to confirm their current situation
· Explain that time is moving on – use facts and figures to back this up. What is happening in the current market?
· Review the exposure of your home – this should have been done on a ‘drip feed’ basis, but still review exactly how many people have viewed the property online, how many physical viewings this has resulted in and how many offers this has resulted in.
· Explain that you are confident that their property has been fully exposed to the market – give data to back this up.
· Ask questions that get the client to self-realise, such as ‘What are the consequences of not selling your home in the next 10 weeks?’
· If the client says that they are happy to wait for 1-2 years or a long period of time to sell their property, ask the ‘What do you see improving in the next 2 years?’
· Then, go on to ask ‘more likely’ and ‘less likely’ questions around the uncertainty of Brexit and the possible increase in mortgage rates meaning that over time, less people are likey to be able to afford their property.
Analogies, graphs & visuals
Analogies and stories are effective tools in being able to explain confusing information to clients. Alongside these stories, graphs and visuals help vendors to understand concepts such as ‘getting ahead of the market’ when it comes to reducing the asking price.
8 x 8
An 8 x 8 campaign is where you make ‘8 touches in 8 weeks’ – a touch being anything from a newsletter to a phone call to a hand written card.
You can use websites such as Rightmove, Zoopla, etc, and set alerts for new properties on the market, properties that have been on the market for 6 weeks or more and for withdrawn properties. You could contact the vendors of withdrawn properties and enquire to see if they are still interested in selling the property.
I hope that you have found this post useful and I look forward to keeping you up to date with my findings over the coming weeks as we move to our new office in Victoria!