REALTOR® Magazine-Daily News-Do Your Sellers Suffer from PDS?

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Daily Real Estate News | November 11, 2008 | Do Your Sellers Suffer from PDS?
Many sellers are suffering from an unfortunate condition called Price Denial Syndrome, said real estate trainer David Knox, of David Knox Productions in Minneapolis.

These sellers tend to resist the reality that they must lower the listing price of their home, unwilling to accept that the days of the boom market are gone, said Knox, who spoke at the REALTORS® Conference & Expo in Orlando last week.

Common symptoms of Price Denial Syndome include blaming you for suggesting a price reduction and trying to justify why buyers would pay the higher price.

But you know the truth: Homes are simply not going to sell if they are overpriced in the current market. In a hot market where demand outstrips supply, overpriced homes might sell, but “in a falling market, overpriced homes sit unsold,” Knox said.

To cure your sellers of Price Denial Syndrome, Knox offered responses to these common objections:

“We really need the money.” Sellers must be highly motivated to sell or they will resist a price reduction. To get to the root of their motivation, ask emotional questions such as: “Have you definitely decided to move at this time?” “What if your home didn’t sell?”
“We can always reduce the price later.” A property that lingers on the market too long is often plagued by constant price reductions to generate buyer interest. The more price drops, the more buyers keep waiting for more. The home will likely sell for lower than what it should and take much longer to sell too, Knox said.
“Could we just try it at this price for two weeks?” Buyer activity is highest when it’s just listed so don’t turn off the serious buyers at the beginning. “Tell them that you can raise the price after the first two weeks,” Knox joked.
“They can always make an offer.” Some buyers won’t even look at a certain price point so you’ll likely be excluding buyers who would be more serious about purchasing it if you don’t price it appropriately, Knox said.
“We want to buy at the bottom of the market.” Some buyers are waiting for the market to bottom out before they act. “But you can’t buy what it was – only what it is,” Knox said. By the time the market starts to turn around, they’ll be buying on the way up and likely miss out on lower interest rates and face multiple offers with sellers less apt to negotiate.

When responding to customer rejections, Knox suggested pulling some “media judo.” Instead of fighting against negative media reports about the real estate market, use them to justify a price reduction to sellers.

Pull out newspaper clips showing the rising foreclosure rates, drops in housing prices, and increasing inventories to support why your seller’s home needs to be priced competitively to sell in today’s market.

Also, take a CMA field trip with your seller to help justify the price you suggest. Visit three competing homes on the market so they can make the comparison themselves.

—REALTOR® Magazine Online