On Monday, we started this short-term series about how to respond when someone says, “We need to think about it.” If you haven’t already read the first three in this series, please go back to read that information before you delve into these details.
We’re re-stating the last point from yesterday’s blog to put things into perspective for moving forward. Here we go —
4. Your Promise to Increase the Net: You now have the sellers on the same page, because they will give you the listing if the net is increased by the $5,000 we previously discussed. You can then say, “Well, I hope that you have felt that my presentation has exceeded your expectations. I would like to exceed your expectations one more time. I would like to show you a number of ways in which I can increase your net by the amount we have discussed.” You will need to have a number of ways to increase their net, none of which includes a commission reduction.
A. The Days on Market Net Increaser: Always be armed with MLS statistics regarding average days on market for like-kind or like-area properties. Compare this number of days to your average days on market (personally or in your office) and determine if it is less. The amount of carrying costs you save a seller is based on the amount of time between the MLS statistics and your statistics. Hopefully, this number will get you close to the amount of commissions they want to save. Every day you save in the marketing time, the seller saves in interest, taxes, insurance, maintenance, and lost opportunity costs on equity.
B. The List-to-Sale Ratio: Another method of using MLS statistics will be to determine the average list-to-sale ratio in your board on like-kind properties in similar areas. This average, compared to your list-to-sale ratio or your office’s list-to-sale ratio, will allow you to determine the difference between the two percentages.
If you can show a better list-to-sale ratio, it will go a long way in overcoming the commission reduction request. When asked why your list-to-sale ratio is better than the board’s list-to-sale ratio, refer back to the famous listing presentation that you have already made.
C. Raise Their Price: One of the most obvious factors is to raise their price by the amount of money they are requesting plus the closing costs associated with the higher price. If they are asking for a 1% increase in their net and raising their price by that small amount will make no difference in the marketing of their property.
There is an amazing truth in this procedure – YOU CAN NOT GET A PRICE REDUCTION UNLESS YOU HAVE THE LISTING! Even in a down market, you can afford to raise the price 1% with a seller who is otherwise motivated. We will show you later in the book how to negotiate price reductions, if you end up being over-market.
D. The Team Approach: “Another way that I can also increase your net is by once again bringing up my team approach. If you take another look at our team approach, you will find that one of the pictures I have is of my home inspector. Because of the amount of business that I have given my home inspector, he is willing to inspect your property in the next few days. He will E-mail each of us the results.”
Continue with, “From those results we can determine a short list of repairs that should be done prior to our going under contract with a buyer. The benefits of doing these repairs early are numerous. This will eliminate them from being concerns by a buyer who will exaggerate their importance, thus offering a greatly reduced price. It will also remove the heat of negotiations that often center around small repairs. You will also allow us to have these repairs completed in a professional manner without time constraints since we are not under contract. Once we agree on any repairs that should be made, we will obtain multiple bids allowing us to choose the best price.”
Wrap up with – “The contractor knows that we are not under the gun so he will not artificially increase the price. Furthermore, we remove the buyer from being involved in the process. What I mean is best illustrated by an experience I had. I had a home that had some leaks around the chimney. The repair was evaluated and was repaired for $700 by replacing the chimney’s flashing. If we were in the heat of negotiations with a buyer, I can almost guarantee you that the buyer would have wanted that leak repaired by asking for a new roof, especially because this roof only had five to seven more years of useful life. The buyer will always want the most expensive resolution to the problem. Can you see how an early resolution to any potential problems will not only make a buyer feel more secure but also keep them out of the problem resolution saving us hundreds, if not thousands, of dollars?”
If the seller is concerned with the cost of this report, explain that because your home inspector is part of your team that he will not request any payment until closing (or heaven forbid – the expiration of the property). Now that cost is not a factor, and they can actually be forewarned of any potential concerns with the property, you will find that this team approach to the condition of their property, prior to the buyer’s scrutinizing eyes, makes an amazing amount of sense to the seller. It all comes down to dollars and cents (or sense)!
Come back tomorrow for the conclusion of this series!
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