Real estate agents: Here's how to ask for a price reduction (scripts included)
Grab a coffee and a comfy chair. It's time to tackle one of the toughest parts of selling real estate - asking for price reductions...
There are no bad houses. There are just different houses. And every home would sell tomorrow at a certain price level.
Therefore, every listing is a good listing, at the right price.
But how do you transition from 'owner that wants too much' to a well-priced listing?
First, we need to put ourselves in their shoes.
Audio version:
Every owner wants as much as possible
It's human nature to desire the best possible result. That owner has been paying the mortgage all these years and probably has most of their personal net worth tied up in their home. The final sale price could potentially have a major influence on their quality of life moving forward.
So it's understandable if they are hoping for the very best possible price at the start of the process.
It's your job to establish the market value of their property by finding the best buyer(s) who are prepared to pay the most. Essentially, to bridge the gap between the owner's expectations and what the market is prepared to pay.
Before you can find the market value level that attracts offers though, you need to fight for your owners and exhaust every avenue to secure the best price.
In other words, rather than fighting an owner's price expectations from the start, you need to show you are in their corner. Be a champion of their home. Be a voice of positivity and employ a solution focus at all times.
Exhaust all other options first
Before you go anywhere near talking about a price reduction, you need to show your owners you are on their side.
Check out our listing refresh checklist and work through the ideas on that list first, so you can earn the right to ask your owners for a price adjustment.
The list includes:
Changing the main advertising photo, changing the advert headline, adjusting your script to target a different demographic, improving the online presence, suggesting more marketing options, and/or running a boosted advert on social media.
Read: How to write compelling adverts.
Price reduction scripts
If, after a few weeks on the market, your listing isn't moving, it's time to talk about price.
Rule 1. Never ask for a price reduction by email if you can avoid it. Always do this at a face-to-face meeting, or over a video call if your vendor is out of town.
Start by establishing what you have learned so far.
Here's an example:
"Mr & Mrs Owner, over the last 3 weeks we have had 3,576 hits online, 8 email enquiries, 13 phone enquiries and 15 visitor groups through your home. So far, 2 buyers have shown some level of interest but neither group have had a second look and no one has been prepared to make an offer as yet...
"Mr & Mrs Owner, how do you feel about the marketing of your property so far?
"Is there anything else you would like to see happen? Is there anything we aren't doing that you think we should be?"
Explanation: This is critical. Before you ask for a price adjustment, you need to make damn sure your owners are happy with the job you are doing and ask for their acknowledgement that everything that could be done to find the right buyer, has been done.
If they have a valid concern about your marketing approach, acknowledge it and talk through it with them. Even apologise if you need to. Suggest what you will change moving forward to alleviate their concern.
Next, pass on any buyer feedback that you have.
"Mr & Mrs Owner, part of my job is to tell you why buyers have decided not to proceed further with your property. Bear in mind, I love your home and please don't take this personally. I'm just the messenger here. Would you like to hear what they are saying?
Explanation: If it is something the owners could change (like too much clutter) then discuss a plan to improve this if possible.
If the feedback relates to something they can't change (like a lack of afternoon sun), then acknowledge that you understand they can't do much about that.
Now you can move on to price feedback.
"Mr & Mrs Owner, we've had a range of price feedback, everywhere from X to X but the best type of price feedback is offers on paper, and no one has been prepared to offer as yet (or) the best offer we have had so far is X."
Now we get into the nitty-gritty (price).
"Mr & Mrs Owner, based on what we now know. If I was sitting here with a cash unconditional offer, what level would it need to be at to buy your home?"*
Explanation: Start the price discussion by asking the owners to establish their position. Sometimes they will surprise you with how much their expectations have changed. Don't put words or numbers in their mouths. Let them decide.
*This simple script changed my career. I learned it from my original mentor and manager, Paul Ellis. It's a game-changer.
If your owners respond with an unrealistically high price, go back with:
"Mr & Mrs Owner, I would love it if that price was out there, I really would. Based on the feedback we've had so far though I just don't see where that price is going to come from. If a buyer prepared to pay that price was out there, I believe we would have found them by now."
Now at this point, you are looking for the owners to say something like, "Where do you think our price needs to be?"
If they say that, you know you have earned their trust and respect. Be frank and honest with your estimation. If they don't ask you, still proceed and gently tell them where you think the property sits in the market.
Be brave, don't sugar-coat it. Your job is to tell them the truth.
Once you have shared this information. Ask them how they feel about it. Give them room to talk and digest what you have just told them.
Then you can move on to setting or re-positioning the asking price.
Setting the asking price
Here's a key tip, whenever you talk about price, don't call it a reduction. Call it a price adjustment, or re-positioning.
Eg. "Mr & Mrs Owner, we need to re-position your property in the market."
It might sound a bit cliché but it sounds far better than asking the owners to reduce their expectations.
Avoid the trap of having owners build in lots of negotiating room.
"Mr & Mrs Owner, it's tempting to set a price with room to negotiate, but in my experience, you are better off to price a property sharply and turn down offers that come in low, than to price it higher with negotiating room and not receive any offers at all.
"I'd rather bring you offers that you turn down, than risk not having buyers to negotiate with. So my suggestion is to price it as sharply as you can, and let's get some action happening. If, by chance, your price attracts multiple buyers, then we can still secure a higher price if it's out there..."
If they agree to set a realistic price. Then you are on your way.
If they insist on setting a price that is still on the high side, then my suggestion would be that you agree to let them try it their way, but seek their agreement that you will review the price in 2 weeks if no offers are forthcoming.
"Mr & Mrs Owner, I understand your position. I would want to get as much as possible too. That price seems on the high-side based on what we are seeing from the market so far, but it's your home and you are in charge and I'm here to work for you. If that price is out there, we will find it for you. What I would ask is that we agree to review the situation in 2 weeks' time if we haven't received any offers by then. How does that sound?"*
This is critical - get their permission in advance to have another price meeting. This makes it far easier to get a price adjustment in 2 weeks if the review has already been agreed upon.
Note: It's ok if it takes a few review meetings to get this listing into the right price zone. You don't need to climb all the way down the mountain in one go.
*Shout-out to my Dad, John Duncan for the idea around the 2-week review commitment.
Tell them what you will do next...
Once the owners have set a new price, they may be feeling a little nervous or scared. Which is totally understandable. It's time to build their confidence with an action plan.
Explain the immediate steps you will take to get things moving. This should include:
- Adjusting the price on every website
- Notifying every past visitor to the property that the price has now changed
- Advising everyone on your database of the new price
- Notifying all your office colleagues of the price change
- Dropping flyers around the neighbourhood (with owner's permission)
Combine this with other refresh actions from our checklist, like changing the main photo online and changing the advert headline.
Your job is to give the owners hope that a sale could happen soon - and that you will do everything in your power to find the best possible buyer for their home, as quickly as possible.
One last tip!
You should schedule a review meeting with your owners every 2-3 weeks, right from the start. Don't let these tough conversations get pushed back. The quicker you have reviews with your owners, the quicker you will turn your tricky listings into marketable ones, and the quicker you will help your owners get where they want to go.
Don't be scared of review meetings. They are your time to shine!
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