Tech Tools to Help Your Buyers Get the Best Price

Overpriced listings are an issue in any market, even a booming one like we’re seeing today. No matter the market, the ability to persuade your sellers to reduce their price is a critical skill.

The good news is that tried-and-true strategies still work, but there are also a whole new set of automated valuation model (AVM) tools that make it much easier to persuade sellers to reduce their price when needed. 

Here are some strategies:

1. Know your numbers.

The “Rate of Absorption” references how long it would take to sell all the listing inventory in today’s market provided no other listings were to come on the market. Today’s low inventory market won’t last forever, but that doesn’t mean a slowdown. It just means that pricing can be tricky.

Using the “Rate of Absorption” to persuade sellers to lower the price works exceptionally well when the early indicators are signaling a slowdown, but prices are still climbing.

The following script is based on a market where there are five months of inventory:

“Mr. and Mrs. Seller, you have an important decision to make. Currently, there are five months of inventory on the market. What this means is the probability your property will sell this month is 20%. The probability it will not sell this month is 80%. The question is, will you price your property where it will be in the top 20% that will go under contract this month, or will you price your property where it will be in the 80% that will still be listed next month? It’s your choice. Where would you like to position your property in the marketplace?”

2. Track expired listings and price reductions.

Your MLS is an excellent source of data that can help you catch a market downturn early on. 

As the market starts to flatten or decline, price reductions and the number of expired listings increase. Start tracking these numbers now. If they start to increase, your market may be beginning to shift. 

3. Using comparative market analysis (CMA) data to spot a slowdown.

When you create a CMA, search the comparable sales for the last six months and divide the comps into two groups: The first group includes the properties that have sold in the last 90 days. The second group includes the properties that sold in the last 91-180 days. The next step is to check how much each listing sold for on a price-per-square-foot basis and calculate the average price per square foot for both 90-day periods. 

If the average price per square foot for the most recent 90 days is lower than the 

price per square foot for the last 91-180 days, property values in your market area have already peaked. 

4. Review price reductions on Realtor.com.

Realtor.com posts price reductions on its site. When we looked, there were three pages like the one shown on the opposite page for Winter Park, indicating that the market had peaked and is now declining. The average of the nine price reductions for properties priced from $289,000 to $350,000 was $11,777. 

Imagine showing the page with all these price reductions to a seller who was thinking about overpricing their home. Moreover, because Realtor.com is a third-party site, many consumers are more willing to trust these numbers than numbers from a Realtor®. 

5. Use the portals and iBuyer offers to persuade sellers to reduce their prices.

One of the best ways to overcome the objection, “But, Zillow says my house is worth more,” is to point to the values from the other portals based on automated valuations, such as the Chase Home Evaluator, HomeSnap, Realtor.com, Redfin, Trulia and Zillow. Realtor.com has also begun posting preliminary offers from Opendoor, which can also be a resource. 

Here’s how to explain the numbers to your sellers: 

“When three separate AVMs and/or two AVMs coupled with local MLS statistics agree, that snapshot of the price is usually the best estimate of your property’s value.” 

Realtor.com also posts preliminary offers from Opendoor on many of their listings. When Opendoor’s offer is in alignment with local MLS price-per-square-foot evaluations as well as at least one other AVM, those three factors also provide another strong estimate of the property’s value.”

Will your market shift anytime soon? 

Maybe not in Florida, but now is the time to start tracking days on market, months of inventory and the pricing trends using the various AVMs so you will be prepared for any market. 

Bernice Ross is president and CEO of BrokerageUP! and RealEstateCoach.com. She is a national speaker, author and trainer.