Summary

More and more price reductions are happening as the market continues to shift. So how do you do a price reduction? What do you do when a listing sits on the market too long? 

1. START WITH THE RIGHT PRICE. It’s better to start with the right price rather than come in weeks later and do a price correction because the most motivated buyers have already seen and rejected it the first week it came on the market. 
2. BE UPSET ABOUT IT BEFORE THE SELLER GETS UPSET. If the listing doesn’t sell 4-5 days after it goes on the market, have an honest conversation with your seller about the situation. When you let them know that you’re not happy about what’s happening, it shows them that you care and that you’re on top of things.
3. SHOOT STRAIGHT WITH THE SELLER FAST. Tell them that you have to do a significant price reduction ASAP so you can reach the most number of potential buyers.
4. KEEP IT ABOUT THE MARKET. It’s all about the market & what buyers are willing to pay.
5. GIVE THEM FAIR WARNING. Four or 5 days after it goes on the market, suggest doing a price reduction to your seller.
6. REDUCE THE PRICE SOONER RATHER THAN LATER. A listing becomes stale the longer it sits on the market. When people see that a listing has been on the market for so many days, they will wonder, “What’s wrong with that house?”
7. BIG PRICE REDUCTIONS ARE BETTER THAN SMALL PRICE REDUCTIONS. When you do a big price reduction, you reposition your listing on the market & increase your chances of getting multiple offers. 

Most importantly, have certainty and confidence with your sellers to lead them to make sure that they get the right price for their home. 

Full Transcript

Well, my friend, welcome back the return of The Price Reduction. Yep. It’s been gone for about 10 years. We have not been in a market where you were having to deal consistently with price reductions, and yet over the last six months, price reductions across America have skyrocketed, almost every major market. 

In Los Angeles, California, back in Q1, we were averaging about 50 to 60 price reductions a week in Los Angeles. In a city of 4 million, 50 to 60. Today, it is over three times that in literally just three or four months. So, what’s changing? The market is changing.

The question is, now that you’re taking listings and now that properties are tending to sit on the market longer, inventory is rising, and price reductions are coming back, how do you handle it? When you take a listing and it’s not selling, how do you get price reductions, and how do you approach all that? 

I want to give you seven steps, seven steps today, on how to deal with getting the price right on a listing when it’s not selling. 

7 Steps On How To Deal With a Listing That Isn’t Selling

1.START WITH THE RIGHT PRICE. Now, let me just start with this as number one. Let’s start with the right price.

It is nine times better to start with the right price than it is to come in after the house is on the market and come back a week or two or three or four weeks later and try to correct the price after all the buyers in the market have already seen the house, and they’ve already said no to the house. I want you to think about it this way, when you put a house on the market this week, brand new listing this week, who sees it? Every single buyer that is in the market for a house like that, and they’re going to see it week number one, period. Within 48, 72 hours, they all know about it. Within a week, they’ve all seen it, and if they don’t write offers on it, then they’ve said no to that house.

Now you don’t just have this week’s buyers. When you put a new listing, you have this week’s buyers and last week. The buyer that just came in the market last week, the ones that came in three weeks ago, four weeks ago, 5, 6, 7, 8, 9, 10 weeks ago. Now, the average buyer is in the market for eight to 12 weeks, so you literally have 8 to 12 weeks of buyers who’ve been in the market, have been looking at houses, and all 8 to 12 weeks of those buyers are right now when the house first goes on the market today, the first time they see it. You’re going to have 8 to 12 weeks of buyers all looking at the house at one time. It is your best chance to get your best offers on the house.

It’s fresh on the market, and it’s got the most eyeballs on it. Because next week, after the first week on the market, the second week, who’s going to look at the house? Only the new people, only the new buyers in the market are going to look at the house. Third week, only the third week buyers, because all the buyers that had been in for the last two months, they’ve already looked at it. Two months or less, they’ve all looked at it. People that are new in the market this week, they looked at it last week. So your third week, there’s only one week of buyers. So literally, every week from there on out, you’re only getting the house to be seen by a very limited group of buyers. That is the new people, new buyers in the market who tend to be the most cautious, the most conservative, the most reluctant to actually make an offer.

Your best chance of getting the best price for your sellers, period, in any market, low inventory, high inventory, buyers market, sellers market, it does not matter. The best time to get the best price for your sellers is the first week it is on the market. You can never recreate that. Even if you reduce the price a week later, two weeks or five weeks or 10 weeks later, you’ll never be able to replace that.

It is always best to start with the right price. Prevention is always better. So, never go in and if you got a seller that’s unrealistic about the price and they’re motivated, they’re going to move, don’t go in there and go like, “Ah, I’m just going to overprice it because the market will convince them.” And, after it’s been on the market awhile and the pain sets in, they will reduce. Okay, that’s a strategy of amateurs, not pros. So number one, start with the right price.

Okay. Now, having laid that out for you and I hope that is critically important to you, so if you have comments on this part of it, go ahead and post them below. Because I think number one, the number one point of price reduction strategy is the most important one, and that is work like crazy to make sure you get the right price. Work like crazy to make sure you know what the right price is and work like crazy to make sure you lead the seller to agree with you on the right price so that you start there.

Okay. Now let’s assume you did that. Let’s assume you got the right price. You put it on the market and it did not get any offers. It maybe got some showings, maybe had some traffic, maybe some interest, but you got nothing. You got no offers. Now, what do you do about it? Okay. Number two. So this is number two, but this is the first thing you do after it has not got offers, has not sold, and you want to do this within a week. 

2. BE UPSET ABOUT IT BEFORE THE SELLER GETS UPSET. Number one, number two, actually. Be upset about it before the seller’s upset. “No offers. The house isn’t selling.”

Here’s what happens. The average agent looks at it and goes like, “Oh no, they had the house on the market all week. We’ve had the open house. Nothing’s happened and I don’t want to talk to my seller.” And, you literally avoid talking to the seller. My friend, don’t do that. Because, what happens when you avoid talking to the seller? They think you’re not working. They think you got something to hide. So, what happens to them? They get upset. What are they upset about? They’re upset, one, because the house didn’t sell. 

But more than that, they’re upset because you’re not talking to them. They’re upset because their agent is not communicating with them. So, when you get upset about it before the seller gets upset about it and you communicate that with them, that gets their trust.

Let’s just play this out. We put the house on the market on Thursday. Had the open house, no traffic, very little traffic, nothing happened. Now it’s like, “Oh, my gosh. Now I got to talk to the sellers on Monday. I don’t want to talk to them because I got to tell them we didn’t really have any good traffic. No, we don’t have any offers coming in. 

What do I tell them?” Well, you tell them what happened. You tell them, “Hey, just wanted to let you know what happened. We had the market, the over the weekend was dead. We had one showing on the property. We should have had a whole lot more, and I just want you to know that I’m not happy about it. Now, here’s what I’ve done. I went back and I checked all the marketing, checked the MLS. I checked our marketing. It’s indicated buyers are seeing the house, they’re seeing it online. But they’re looking at the house, they’re looking at the price and whatever it is, for some reason that buyers are not biting.”

Okay. Now, you make it about the buyers. You let them know, “Marketing’s working. Words out. It’s there. I’m not okay with this.” Now, this is the thing you got to tell. “I’m not okay with this. I’m not okay with this.” That’s number two. Number one, start with the right price. 

Number two, be upset about it before the seller gets upset about it. When you are upset about it and you have this conversation within four or five days after it’s been on the market and go like, “Look guys, I just want you to know I am very unhappy right now because we’ve had your house on the market for five days. I’ve got all the marketing out there. All the marketing’s doing the work and nothing is happening. The market is just not responding the way we expected it to. Buyers are seeing it online or they may be coming and looking at it, but they’re not making offers and we got to get offers. So I just want you to know that I am aware of this, I’m unhappy about it, and we are doubling down to make sure we get something to happen here.”

Okay? When that happens, when I’m upset about it before them, it tells them number one, I’m paying attention. Number two, it tells them it matters to me. Number three, it tells them I’m on top of it. What’s going to happen after four days, five days on the market, they go like, “We don’t have to worry. Our agent cares, our agent’s on top of it. If you avoid them during that first week on the market because it’s not getting traction, then they were like, “Why isn’t the house selling? Then they go, “Where’s our agent? We don’t even know what you’re doing.” 

By the time they get upset about it because you haven’t been communicating with them, you have lost 50% of your credibility and it is very, very difficult to ever get that credibility back. But, when you communicate it before they communicate with you. You contact them before they contact you, they trust you.

3. SHOOT STRAIGHT WITH THE SELLER FAST. Okay. Number three, shoot straight. Shoot straight with the seller fast. You gotta do it. You gotta do it, and you gotta do it fast.

When should you do your first price reduction? First week. Again, for the same reason we just said. Because that first week goes on the market, you got 8 to 12 weeks of buyers all in the market. The new buyers, the buyers have been looking forever, and they’re all looking to see this house that very first week. 

If I reduce it before the second weekend, which is going to be typically busy, it’s showing time, it’s the weekends. If I reduce it before then, those buyers that saw it last week, they’re still in the market. If we do a good price reduction, then I can reach out to the agents and any showings we’ve had and it puts the property back in the hot sheet.

If it’s a significant price reduction, a significant price reduction is always better than a tiny price reduction. Okay? It repositions the house in the market. All the buyers that saw it last week, now they see it again and go like, “Ah, wow, okay. Now this price is… We liked the house, but it was a little expensive. Now to look at that, I like the house. Ooh, like the price.” You gotta be willing to shoot straight with the seller.

4. KEEP IT ABOUT THE MARKET. Okay. Number four is keep it about the market. “I’ve double checked our marketing, it’s working. Unfortunately, the market is not responding the way we expected it. Because as you know, when we sat down and we met, we priced it based on the comps, based on what the market was telling us in the comparative market analysis. Unfortunately, the market has not performed up to our expectations.”

Now why do we keep it about the market? Because it’s what’s about. Not your pricing, it’s the market. What buyers are willing to pay. Buyers look at the house. They compare the house, they compare the price. They compare other houses, other prices, and they look at yours and go like, “No, we’re not going to make an offer on that one.” So, it’s always the market.

When you start saying, “Well, I’m going to try more marketing. I think… I think…” And, you start talking about you and what you think or what you’re going to do. Then, they start thinking it’s about you. Keep it about the market. You’re marketing. If you know what you’re doing, your marketing should be working. Okay? It should be getting this house exposed to all the qualified buyers in the market, period.

5. GIVE THEM FAIR WARNING. Okay. Number five, give them a fair warning after four or five days on the market. I don’t just come in, I call them on Monday and say, “Hey, just want to touch base with you and let you know it didn’t get any offers. It did not go the way I wanted it to.

I’m upset about it. Let’s reduce the price.” Because you do that that quickly, and they just kind of like, “What? You’re wanting us to reduce the price this quickly.” It’s kind of like this sudden shock of a bucket of cold water on their head and they’re going to go like, “Excuse me. We think you need to check your marketing. We think you need to do more.” So you want to give them a fair warning.

Now, here’s what I mean by fair warning. Already done what we said, is let them know. “Hey, this is what happened this weekend. I’m not happy about it. I’ve double checked the marketing, everything is working. Okay. Unfortunately, the market is not responding the way we expected it to. 

So, here’s what I’m going to suggest. I’m going to go back, double check the market. I’m going to follow up with all the people that have seen the house, all the people that have expressed interest in the house, and we’re going to watch over the next few days. Just see what happens and see if we get some more traction, some more buyers and an offer. If not, then probably before the end of this week, before we go into the weekend, I’m going to suggest that you may want to look at adjusting the price.” Adjusting the price, reducing the price, whatever you want to say.

Okay. So, you’re letting them know, “Okay. Here’s where we are. I’m not happy about it. It’s not going good. We still got some time. Let’s see what happens over the rest of this week and if not, I’m going to suggest you might want to consider reducing the price. You guys still want to get the house sold, correct?” “Yep. We want to get the house sold. We want to get it sold as fast as possible, right?” “Yep. We want to get it sold, and you want the most money.” “Yep.” “Okay. Here’s the best strategy.” Sooner we get that house priced where the market likes it, the sooner we’re going to get good offers. The longer it sits, the house gets stale. So, you give them fair warning it’s coming.

6. REDUCE THE PRICE SOONER RATHER THAN LATER. The number six is, we want to reduce it sooner rather than later for the reasons I just said. The longer it sits on the market, it becomes stale. People look at it and they go like, “That house’s been on the market for 67 days.” I call it the WWWTH syndrome. House been on the market for two months.

What’s wrong with that house? WWWTH. I would tell my sellers, what we don’t want to have happen is we don’t want the house to sit on the market and it to get stale. When we do that, the WWWTH syndrome sets in. What’s wrong with that house? Then, buyers start looking and going, “Oh, it must be something wrong with the house.” Even when we start reducing the price, you’re going like, “It still hasn’t sold. Must be something wrong with the house.” So sooner, rather than later on price reductions is better.

7. BIG PRICE REDUCTIONS ARE BETTER THAN SMALL PRICE REDUCTIONS. Okay. Now last thing, number seven. Big price reductions are better than small price reductions.

A tiny price reduction has basically one purpose and that is, it pops it up in the hot sheets. Okay. Makes it show up and all the hot sheets and searches and all that kind of stuff, which has some value to it. 

But the problem is, people are not stupid and people now have all the data in front of them. So, they look at it and they can see the original list price. They can see the price is, the house was originally listed for $999,000, and today it’s listed for $998,000. “Woo. Well, it’s a deal now.” They’re not going to think that. When you do that, people just go like, “Ah.” They just dismiss it because it doesn’t reposition the house in the market. When you take a house that is listed at a million dollars or $999,000 and you reduce it to $980,000 or to $975,000, or even to $950,000. When you reduce it to $950,000, that’s a 5% price reduction.

A 5% price reduction, you have now repositioned the house in the market. Or, let’s say you have a house that’s listed originally at $940,000 and then you reduce it to $900,000. When you go from $940,000 to $900,000, you’ve literally put it in a new price bracket. People looking from $800,000 to $900,000, they’re going to see it now. So, you literally reposition the home in the market when you make a significant price reduction. 

Now it’s scary, because you’re like, “Oh no. Now we’re going to get lower offers.” Well, what happens now is when you hit the right price point, the chances of getting back into a multiple offer situation suddenly go up because people go like, “Whoa, that house was listed, and I’m seeing this.”

I’m seeing here in the South Bay of Los Angeles where I am at our HQ here in Redondo Beach is, I’m seeing sometimes as much as 10% price reductions. What that does is people go like, “Okay, they just put the house on sale. There’s only one of them.” Buyers are going to be jumping on it, and so now you get back into multiple offer situations. So, when you’re gone from a million to $900,000, people were like, “Ooh, this house is a steal. Let’s take a shot at it.” They start coming in and now you’re in multiple offers situations and boom, boom, boom. Now that $900,000 goes up to $940,000 to $950,000, and it gets the sellers the best price they are going to get in this market.

The Most Important Thing…

Now look, the most important thing is that you’re able to have certainty and confidence with your sellers to lead them to make sure that they get the right price, both on the front end, and if it doesn’t sell, in the price reductions. Every single time you have to go back and ask for a price reduction, you lose credibility. Even if it’s not your fault, even if it’s the market, even if the comp said this and you put it at this and it didn’t sell. When you go back and say, “That didn’t work, we got to reduce the price.” Every time that happens, they’re going like, “Okay, so is it the price or is it our agent?” Because over time, if you have to go back and ask for two or three price reductions, they go like, “Okay, maybe it’s our agent. What are they doing? Maybe what are they not doing?” The sad thing is, they’re probably not going to mention it to you. They’re just going to not trust you as much.

Every time you have to go back, you’re telling them, “My strategy failed. We’ve got to make a price adjustment.” So every time you go back to them, they’re going like, “Okay, seller, this is going to cost you money.” So, when you do have to get a price reduction, make it count, because you don’t want to have to be going back time after time after time. Because even if you eventually do get it sold, you’ve lost so much credibility with the seller that they probably will never forget. Their raving fan-ness about you, that they love you and they think you’re awesome, that disappears forever. I want them still going in to go like, “Okay, didn’t work. You took care of it and you got it sold, great job. We’re excited. You’re our agent.” So that you create that loyalty for sale after sale after sale and referral after referral.

So my friends, pricing is so critically important. So critically important. Price reductions are painful. If you gotta make them, make them fast and get it done. 

I hope this video has been helpful for you. If it has, make sure that you give it a thumbs up. Any questions, comments, put them below. If you’ve got ideas that you’re using for price reduction strategies that are no BS, put those in the comments as well. I’m always interested in hearing what other agents across the country are doing. No BS. We don’t do bait and switch tactics here. Certainly not what I train. 

If you have not yet subscribed to the channel, make sure you subscribe to the channel for more great videos. I will see you in the next video.