Editor’s Note: The Playbook is a new RISMedia weekly segment centering on what brokers and agents are doing to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every Thursday for another addition to the series.
Gaining the exclusive listing to sell a house…that’s the ultimate, right? If you rep the buyer, the commission’s all yours. If another agent is responsible for the other side of the deal, so be it; you still get half. What could go wrong?
Well, there’s this. You may find yourself with a reluctant seller. Times have certainly changed from even just six months ago, when sellers enjoyed bidding wars and could pick and choose just the right buyer. Now, with mortgage rates having doubled and economic uncertainty in the air, you’ve got your work cut out for you.
There are several reasons why a seller may be reluctant. First, they’ll need to move somewhere else, and unless they’ve already settled on their landing spot, they may face the same challenges buyers do. Or they may think their house is worth much more than the price you’ve recommended it be listed. After all, they could have (and probably would have) made a bigger profit had they sold last summer. Then there are those who start with good intentions to sell but waver as the reality becomes closer, with the sadness over leaving their beloved, longtime house potentially causing an about-face.
So what are REALTORS® to do with such clients? There are specific strategies for each situation.
Managing seller expectations
“Many sellers are reading media headlines but don’t understand how the news impacts their sale until they are on the market,” says Lauren Walz, an agent with the Dawn McKenna Group in Hinsdale, Illinois. “It is important to show them how buyers’ expectations and buying power has changed, through data and statistics. Say a property was sold prior to a mortgage-rate hike. To make a comparable home affordable to the same buyer now, you must reduce the price to account for the additional monthly costs of the higher rate. It is also important to remind sellers of why they are selling. Most often, selling a house is not a 100% financial decision. When sellers keep in mind their ‘why,’ they are likely to sell for market value.”
Julie Fisher, a REALTOR® with Crye-Leike Real Estate Services in Chattanooga, Tennessee, seconds those thoughts, adding that “talking with sellers about the current market is a key piece of communicating with your clients and affirming their frustration that home prices may not be what they were recently. We hear on the news about the declining housing market, and it has been making an adjustment, but it is an important conversation to have with sellers as to what that adjustment is in their area, even paring that down to market conditions in specific neighborhoods.
“A comparative market analysis (CMA) is very helpful to establish that, but it can also be worthwhile to assess the equity sellers have in their home. Ideally, if they are satisfied with the equity, that coupled with a CMA can lead to establishing a realistic list price.”
Looking back on what was is a futile exercise. Mortgage rates are now several points higher than they were last year, and that likely won’t change dramatically. In fact, they could rise. When Christine Stucke, a sales associate with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Turnersville, New Jersey, encounters sellers who rue missing out on the bidding-war frenzy of early 2022, she puts an immediate stop to it.
“I am very forthcoming with my clients in any market and find it best to be realistic in order to avoid potential disappointment,” she says. “I manage their expectations in a manner that results in what a market is versus what a market was. Research and supporting stats help to relay a view of where their home will fit in today’s market with not only the decrease we see in offers, but the decrease in the buying power of the people actively looking.”
When emotions cause issues
Sometimes factors beyond logic or money can give even well-meaning sellers pause. Everyone’s familiar with buyer’s remorse. There’s also seller’s remorse, and it can cause agents to lose time and money if it squashes deals. People who have lived in their houses for many years can get emotionally attached to them. They raised their kids there, celebrated good times there with friends and relatives and became close with neighbors. It’s easy to go through the motions of hiring a REALTOR®, establishing a price and having a For Sale sign planted in the front lawn. It’s not so easy for some to carry through, however.
So how do agents approach such a sensitive situation? There are a few ways. The first could be to do nothing right away.
“Regardless of age, people don’t tend to be serious about their move until they are happy about where they are going,” notes Deb Dorsey, a sales associate with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Rosemont, Pennsylvania. “If it is truly the right time for the seller, they have to come to the decision on their own. It’s bad practice to push them. There will be people who just need more time.”
Stucke agrees, and explains how she uses equal doses of empathy and logic to try and literally get sellers moving.
“Generally emotions are a touchy subject, and one I respect greatly when having the opportunity to work with an older client,” she says. “Certain ones will need more of a hands-on approach, and the idea of someone new starting another chapter in a home they have loved offers a tug on their heartstrings. I explain the idea of decreasing the cost of living and maintenance for them, noting it’s a win-win situation. If their objective isn’t to downsize, I will use the same approach on their particular situation: proximity to work, family or even the condition of a home and the work it needs.”
Fisher will ask reluctant sellers to explain very specifically what their process is, then must decide whether or not she can foresee a sale happening eventually. “I ask what is causing them to hold back on selling,” she says. “Knowing the answer is helpful in determining the amount of time to spend with them.”
Going back to the start of the process may be the final step that gets things rolling anew.
“There is always a reason the seller called in the first place,” reminds Walz. “It’s important to remind them of that. My job as an agent is to educate the sellers to make the best decision for themselves and the house. Sometimes that means advising people not to list their house. Sometimes that means agreeing to push the price and managing expectations early that a price reduction is necessary if the house doesn’t sell within a certain timeframe. Often, unmotivated sellers get motivated when they understand the data. There are many factors that help a seller decide if it’s the correct time to sell. It’s important to know them all, as they change for each client.”
5 key takeaways
- Manage seller expectations by explaining what the market is today as opposed to what it was last year.
- Continually remind sellers why they are selling, which they should have explained to you in detail.
- Point out that mortgage rates are higher and are unlikely to change dramatically. That will work in their favor if they are purchasing a home to replace the old one.
- Be ready to experience emotions from sellers who rue leaving the house they’ve lived in for a long time and likely raised kids in.
- Remind sellers that they began the selling process for a reason, and unless there’s a major roadblock, they should carry through.