Having an overpriced listing is embarrassing, unprofessional, and unprofitable. When your listings are priced right, you feel proud, confident, and relaxed. In fact, instead of worrying about your listing selling, you can almost choose whom you will let buy it! There are three main reasons why agents overprice:

1. No pricing presentation. Agents have perfected the listing presentation and related documents. You must also prepare a separate manual containing your Competitive Market Analysis, supporting documentation, and pricing illustrations that address all the key objections.

2. Fear of confronting the seller. You must be tactful, yet assertive in addressing the price. A rule to follow is to always question their position, never defend your own. Do a pricing presentation that blames the market ...don't have it be your opinion.

3. Owners don't believe you. Your position is one of vested interest in having the home sell quickly, so the owners may not trust your presentation. That's why you must base it on facts.

Here are some standard pricing objections and techniques to handle them.

• "Another Agent said they'd list it higher"
  
  Inform the sellers that their mission is to select the best agent, not the best price. A real estate agent has no control over the market, only the marketing plan. Never select an agent based on price.
  
  "Mr. and Mrs. Seller, I am here because I want you to hire me to market your home. I am accustomed to being in competition with other agents. If you chose me I want it to be because you feel I am the best one to handle the marketing of your home, not because I said the highest price. If you don't feel that I am the best, then don't hire me...no matter what price I say. If you hire the agent you like least, but says the highest price, you'd be overpricing your home with the least qualified agent. If you are going to over price your home, do it with the best agent."
  
  This is a powerful statement to make to owners. Make the point that they should hire you because you're the best, not the most agreeable on price.
  
  
• "We can always come down"
  
  Show the history of an overpriced home. Illustrate the stair steps down from the high price through market value down to a sale price under market value.
  
  "...Here's a home that started out at a price $x,xxx over market. It didn't sell so they reduced the price. It didn't sell so they reduced it again. It still didn't sell so they reduced it again. And finally they reduced it to market. What do you think happened? (Owner: I suppose it sold?) No. It still stayed on the market. Do you know why? What question do you ask me at the front door of every home I show you? (Owner: How long has it been on the market?) You ask me that because if it's been on a long time you can buy it for under market or something is wrong with it. That's what happened to this home. It sold for $x,xxx below market price. What do you think would've happened if it were priced right on the first night? Yes you can come down, and as you can see, you will have to. Is this the way you want your home marketed?"
  
  
• "Couldn't we try it for a couple of weeks?"
  
  Illustrate that the majority of market activity occurs in the first two to three weeks on the market. Use a chart that shows a curve of high activity in the first two to three weeks. Show them that this is the worst time to overprice since your best customers see the home.
  
  "As you can see by this chart, most of the marketing activity on a new listing occurs in the first two weeks on the market. So when you ask, can we try it for a couple of weeks, look what you're doing. You're overpricing your home during the period when your best buyers show up, then lowering it after they're gone. It's like having a dinner party on Saturday and having the caterers come on Monday. I recommend that you price it right on the first exposure to the market."
  
  
• "But we have so many improvements in it."
  
  Most improvements are made for enjoyment, not resale. Cause the owners to admit this by asking the owners:
  
  "If you had known at the time you were making those improvements that you were going to move today, would you still have made?" (Owner: No, we probably wouldn't ) May I ask why not? (Owner: because we couldn't get our money back.)
  
  Another important point is that structures and improvements to it do not appreciate in value. It is the real estate-the ground beneath it that appreciates. Where is it said that you can buy an item, install it in your home, decorate it to your taste, use it for a few years then ask a new buyer to pay you for it? The question that determines the value of an improvement is; if the item were not there right now, how many buyers would add the same improvement and pay what you want to charge?
  
  
• "But we paid $____________for it"
  
  This is the owners attempt to link cost to value. There is no relationship between cost and value. What you paid for something has nothing to do with what it's worth today. If you purchase stocks, you clearly understand this principle. A technique to illustrate this to owners is to ask:
  
  "Mr. and Mrs. Seller. I hear you say that since you paid a certain amount for this home that the subsequent selling price should be based on that. Is that right? Let me ask you a question that is realistic in many situations. If you had inherited this home through an estate, therefore your cost was zero, what would you try to get for it today? (Owner: As much as we could get.) Why, you wouldn't have paid anything for it? (Well, that doesn't matter...)
  
  
• "They can always make an offer"
  
  " Mr. and Mrs. Seller. The only way a qualified buyer can make an offer on your home is if they see it. The problem is, most buyers look up to their price range, peek a bit over, then focus only in their price range. By overpricing, you put your home into a price bracket where they won't look. (Show the MLS book and/or computer printout and how their home will be invisible to a buyer by not being in their range.) The buyers who do see your home will be able to afford your higher price, however, they will not be interested in it. The wrong price attracts the wrong buyers."

Use these techniques with caution, tact, and compassion. Owners are not so unusual to want as much money as they can get for their home. You owe it to them to get as much as the market will pay.