Article written and provided by Neil Jenman from Jenman.com.au . To see the original source of this article please click here. https://jenman.com.au/when-conditioning-is-essential/
HOW TO AVOID IT AND GET A BETTER PRICE.
by Neil Jenman
READING TIME: Apx 7 minutes
If you’re a home seller, you should understand why agents use a method called “conditioning”.
Let’s imagine you are a real estate agent.
Imagine you are ‘pitching’ to sellers. You know these facts: The sellers must sell. Their home is worth a million dollars. The sellers want $1.25 million. If you tell the truth – the home is worth a million dollars – the sellers will reject you. Another agent will accept the home for sale at $1.25 million. The other agent will then start “conditioning” the sellers down in price until they “see reason” and sell for a million dollars – or often less.
What do you do?
Tell the truth and lose the business and earn nothing?
Do what most agents do. Sign them up, then talk them down. And make the sale and get paid.
This is the real-life dilemma agents face every day.
Most home sellers start off wanting too much. It’s human nature. We all want the best. Especially if we suffer the pain of losing our much-loved home, let’s soothe our hurt feelings with a big payout.
But sellers’ feelings are not important to buyers. Or most agents.
When you’re selling, the cruel fact is that most buyers compare the asking price of your home with other homes for sale. If your home is too dear (in the buyers’ opinion), they won’t buy it.
When pitching for listings, agents are scared to tell sellers the truth. They don’t want to miss out on the listing.
The goal of most agents when meeting sellers is simple: Sign them up, then talk them down.
To talk sellers down in price, the agents use a process known as “conditioning”.
The big word sellers will hear constantly is the word “market”.
Before the home is listed for sale –
“We’ll see what happens when we take it to the market.”
“The market is quite strong at the moment”.
“There are some high prices in this market.”
And then, once the home is for sale –
“The market is telling us we may have been a bit optimistic.”
“We’ve had a few offers, but well below what we were hoping.”
“This is what the market is saying.”
The sellers are now under increasing pressure.
Now it’s time to make the sale – “crunch time” –
“The market has spoken, it’s time to make a decision.”
“We’ve had 67 groups through the open inspections.”
“The marketing campaign [which cost you $5,000] has been extensive.”
“If you don’t accept this price, it’s likely to be much worse in the weeks, months ahead.”
After this conditioning – over a period of weeks – most sellers are worn down. They crack. In many cases, they are so fed-up, they will sell at almost any price to stop the emotional pressure (torture) of the conditioning process.
Unfortunately, “conditioning” often does its job too well. It forces the price down too far, well below what the sellers could have received had everyone been sensible in the beginning, when the home was first offered for sale.
All this conditioning activity would not have been necessary if the property had first been priced sensibly or even slightly more than “market value”. Where no price appears (such as auctions), the conditioning process would not be necessary if most sellers were not stubborn about prices.
GET A VALUATION
For sellers, one of the best investments they can make is to get a valuation before they meet agents. And then, once they interview agents, they should avoid mentioning a specific price – and never tell agents their lowest price (or that will instantly become the highest they ever get).
Sellers should let agents do the talking. And openly record what they say. Sellers should ask agents: “How much do you feel you can sell our home for? We are genuine sellers. We just want the highest market price you can get.”
If you’re selling, do not force agents to “condition” you. Keep your price to yourself.
Don’t try to “sell” agents. Sure, you can point out the good features of your home. But stay away from mentioning (or worse, demanding) a specific price.
Keep saying you want the “best price possible” and without wasting thousands of dollars on needless expenses such as advertising or staging (in many cases) or all the other payments that so many people want you to fork out. Big expenses are seldom necessary.
What is necessary is to avoid the conditioning process.
OVER-PRICING LEADS TO UNDER-SELLING
As hard as it may be, do not put your property for sale at a price that’s far too high. You’ll turn buyers away. And then, as time goes on and you haven’t sold, you’ll be forced to lower your price and accept far less than you could have achieved had you been sensible.
Homes that are over-priced in the beginning are likely to be under-sold in the end.
Yes, of course, you may fear selling too low. But the solution is not to ask an impossible price and think: “We can always negotiate down.” The people who would have bought your home will not even see it if a too-high-price turns them away.
If you are worried about pricing your home too low, don’t be. As soon as your home goes for sale, you’ll know if it’s priced too low because you will get two or more buyers wanting to buy it. In such cases, you can ask each buyer to make their best offer. And that’s when the price can really shoot up.
Be careful, of course, to make sure that, if you have two or more buyers interested that each buyer does not know what all the other buyers are offering (as in an auction).
As a seller, you want buyers to offer their highest price; you do not want them to look at buyers below them and, instead of offering their highest price, just offer a bit more than other buyers.
BEWARE OF THE “TRANSPARENCY” TRAP
Stay away from any method – auction is worst – where buyers see all offers. Only incompetent agents recommend auction or an open system of negotiation where everyone knows everything.
These agents say everything is “transparent”. But, if you want the highest price, “transparent” is a dangerous word. You wouldn’t play a game of cards and allow your hand to be shown. Not unless you want to lose.
Too many sellers lose too much when they are selling because agents and their methods – all designed to make a sale at any price – take precedence over the needs of the sellers, most of whom will accept the best market price, even it is under what they perhaps hoped to achieve. Especially if they trust the agent.
ETHICAL CONDUCT WINS
Real estate is an ugly business. One real estate trainer teaches agents to “go ugly early” – start the conditioning process fast and hard.
But imagine if, instead of learning “tricks of the trade” agents learned a few ethical basics, such as the main rule, “Don’t hurt anyone.”
And then, imagine if they sat down with sellers and explained – heart-to-heart – what really goes on in the real estate industry.
Here’s what agents would find if they adopted truth and fairness and true “transparency” about the workings of real estate –most sellers would be impressed. Indeed, so impressed as to be grateful. “At last, we have found an agent we can trust”.
The biggest problem in real estate is lack of trust. And, in most cases, that lack of trust is well justified.
Sellers need agents with three characteristics: A high level of honesty and integrity, a high level of skill in the art of negotiation and a willingness to work hard.
Imagine if all sellers started saying to agents: “The more you can convince us that you are being truthful with us, the more we are likely to select you as our agent.”
And agents, consider this: If you are truly committed to doing what’s best for your sellers, the first thing you will do is increase your knowledge; discover how you can find a better way to do what’s best for the sellers without conditioning. And then you’ll make a lot more sales and you’ll also receive the greatest “payment” in business – the respect and appreciation of decent people.
Let’s start by getting rid of the need for “conditioning”.
If you’re selling your home and you’d like to find an agent with those three ingredients – honesty, skill and diligence – please ask for our support.
We will be proud to help you find the best agent and sell for the best price.