Handling Sales Objections(In Real Estate)

Vol 2 of 3

“Seller’s Objections”

Tony Morrison

Handling Real estate objections

• The idea behind this power point is to give real estate agents ideas on how to tackle the many objections they have to face on a day to day basis when trying to convince people to list their house with them or buy a house through them.

• Each slide has an objection or an issue as a heading and comments below on how to respond to put the clients concerns to rest. There are often several different responses for similar situations.

• The examples which are often abbreviated due to space restrictions should not be memorised but should be put into your own words. The main idea is to understand the meaning behind each script.

“We paid $100,000 more than that 12 months ago when we bought the home”• “ The property market is determined by supply and demand and is subject

to change. Twelve months ago we were experiencing a healthy seller’s market where there were many buyers out shopping for property in this price range.

• Today unfortunately the market is different (state reasons why) and there are high numbers of property for sale whilst the number of buyers looking are low causing prices to fall.

• Your home needs to be priced competitively if we are to attract those buyers.

• The good news is that the property you go on to purchase will also reflect this change in market value so you will buy better than you would have.”

“I need $280,000 to be able to afford my next home” (Trading up in a falling market)• “According to stats the average home owner trades up to a house 50%

more expensive than the one they sell.• If this happens in a falling market ‘you’ the owner trading up in value is

considerably better off if the fall in the market is across the board which it usually is.

• If your house which you were hoping to achieve $280,000 for can now only achieve $252,000 (10% less) it will probably mean that houses that you are looking to upgrade to which were once worth $420,000 are now probably worth (10% less) only $378,000. You are actually $14,000 better off in your pocket in the falling market even though your house value has fallen.

• (Please see next slide for diagram for further clarification.)

“I need $280,000 to be able to afford my next home” (Trading up in a falling market)

New House value

Existing house value

Change over cost to new owner

$420,000

$280,000

$140,000

Trading up 50% invalue to new house

$252,00010% fall in marketmarket value ofexisting home

10% fall in marketvalue of home thatyou are trading up to

$378,000

Trading up 50% in valueto new house in a market that has fallen 10%

$126,000Change over cost toowner trading up witha 10% fall in the market

A 10% fall in the market equates to the person trading up being $14,000 better off even though their house value has fallen.

“The market is rising, if don’t get my price I won’t be able to afford to buy.”(Trading up in a rising market)

• “As the market is rising quite quickly at the moment every day you reject an offer on your house the gap between what you can achieve for your house and what you are going to have to pay to upgrade to a bigger house is increasing.”

“The market is rising, if don’t get my price I won’t be able to afford to buy.”(Trading up in a rising market)

$260,000

$400,000

Owner rejecting offers on house at market value of

Wanting to buy houses in the price range of

Market moves up 10%

over a period of 12 months

$440,000

$286,000

Owner is $14,000 worse off by rejecting an offer in a rising market

Gap in changeover$140,000

Gap in changeover$154,000

“We invested $30,000 when we put in the pool. We need to get our money back on this.”

• “Yes and many buyers out there will find your home more appealing because it has a pool. However some may not.

• Whilst one family may pay more for a swimming pool another family who do not want the maintenance or expense of a pool will value the property lower as they take into account how much it will cost to fill it in and landscape.

• Value is determined by what the buyer gets out of the property, not what the seller has invested.

• Also it is important to realise that buyers are more likely to view your property as a complete package and not as a sum of individual improvements.”

“We need $500,000 to buy the home we have made an offer on otherwise we won’t be selling.”

• “I understand your requirement but unfortunately the dollars you need to buy your new home cannot be calculated into the pricing equation.

• If you look at it this way, if I wanted to sell my Toyota and buy a Porsche could I simply add $20,000 to the asking price of my Toyota just to be able to buy the Porsche?. No, of course not. A simple explanation but the same principle applies to your property sale and purchase.

• If you don’t achieve $500,000 are you able to raise the balance elsewhere or can you re-negotiate your existing purchase contract?

• Competitively pricing your home will give you the best opportunity to NOT lose the home you want to buy.”

“You just want me to reduce my price to get a quick sale”• “I understand why you might feel that way, but the truth is quite the

opposite. I am not trying to get you to reduce your price for a quick sale for my benefit, rather I want you to reduce your price to create competition, sense of urgency and fear of loss for your benefit.

• People will always pay more for something when they think they are about to lose the opportunity to buy it.

• The longer a house stays at a price that doesn’t create competition the less fear of loss buyers feel.

• All I am trying to do is to get you to act whilst the power to negotiate remains with you and not the purchaser.”

“We’ll start high, we can always come down.”• “This is an easy mistake to make but by starting high you will only assist

other homes to sell, not yours. Buyers are very educated on value and in each price bracket buyers expect certain things. If your house doesn’t offer what buyers are expecting for a certain price bracket then your house would compare unfavourably.

• In essence you will make the other homes for sale in competition with yours seem more attractive to buyers. Experience tells us that buyers will be quick to dismiss your home and you will receive no offers.

• By the time you do reduce your price to market value your property may have gone stale as the buyers have gone and then you run the risk of getting less than what your house is worth.”

“We’ll start high, we can always come down.” - (continued)

List

ed P

rice

Days on the market

5% below

5% above

10% above

15% above

20% above

30 days 60 days 90 days

Fair market value

Potential buyers

“We have plenty of time – we’ll wait for the right price.”• “One of the first questions buyers ask us is “How long has the property been on the

market?” Buyers often attach a lower perception of value to a property that has been on the market for a long time and are more likely to pay a premium price when a property is new to the market.

• You see time and perception of value are inseparable.• Let me explain further. When a newly listed property comes on the market the

agents are quick to email and phone their buyers. This causes an initial rush of activity on the property.

• Also important to note is these early inspections are being made by the agent’s best buyers – those ready to by now. This initial activity creates a feeling of urgency amongst the buyers as they feel the pressure to act before they miss out. Hence the early stages of marketing are most often the best time to achieve a premium price.”

(Continued next slide)

“We have plenty of time – we’ll wait for the right price.” (continued)

• “Even though you are in no hurry by over pricing your property you run the risk of being dismissed by serious buyers.

• Once you decide that you wish to get serious about selling then usually all your buyers have gone, the property is seen as a problem and you run the serious risk of getting less than what it is worth.”

“The house is only just up for sale and you have an offer, if we wait longer surely we will get more.”

• “ As I mentioned to you when we listed your house the absolute best opportunity to get the highest price is in the very first period of marketing when you have everybody wanting to look at your home and the buyers are aware that they have competition.

• Nine times our of ten the first buyer you get on a home will give you the best offer you’ll ever get so think very seriously before dismissing it as I have seen too many people live to regret doing just that.”

“The house is only just up for sale and you have an offer, if we wait longer surely we will get more.”

• “ It’s not how long the house has been on the market, it is how long the buyer has been in the market.”

“I’m not prepared to drop the house price anymore, I’d be giving it away if I did.’• “Well we certainly don’t want you to give your house away but if you

want to sell home you have two options.• You either have to out price or out profile your competition.• This means you either have to adjust further to market value or you

need to invest further on marketing your home. What would you rather do?”

“I know you have said you won’t go below $525,000 but...”• “ I have a cash buyer with a limit of $500,000. Am I wasting your time

and my time in bringing them through?”• (works even better when it is not the listing agent asking the question)

“I really don’t want to reduce my house price”• “What is the worst thing that could happen if we change the price?• What is the best thing that could happen if we change the price?• What is the most likely thing that will happen if we change the price?”

“I’m not prepared to reduce my house any further”• “We don’t want to reduce the selling price, just the asking price.”

(It’s not about where you start, it’s about where you finish.”)

“I am not going to drop my price as you haven’t had anyone through yet” • “Unfortunately with the market as it is unless you are very close to

market value you won’t get the buyers through to give you feedback. • Buyers vote with their feet and the very fact that they are not

inspecting your home is an indication, no matter what you or I think or want, that the house is just not exciting buyers.

• If you want to excite the buyers you need to give them something to get excited about.”

“How come we aren’t getting anyone to our Open Houses?”• “The results of an Open house say a lot about the public’s perception

of house value. • An agent can stuff up a lot of things, not return phone calls, not follow

up potential buyers etc. but if no one comes to an open house then price is usually the reason.”

“If you can’t get my price maybe I need to give my house to someone who can”Agent – “Do you have any shares?”Seller – “Yes, I have some ANZ bank shares”Agent – “What are they trading at the moment?”Seller – “They are trading around the $18.50”Agent – “What is the highest and lowest that they have traded at over the

last six months?”Seller – “They have traded between $18.00 and $19.00”Agent – “So they have a trading range of $18 to $19.00” “Who sets this price?”Seller – “The market” Agent – “So what would happen if you rang up your broker and asked him to

sell your $18.50 ANZ shares today at 15% above market value at $21.30?”

“If you can’t get my price maybe I need to give my house to someone who can” (Continued)

Seller – “He would probably laugh at me. No one is going to pay $21.30 per share if the market value is $18.50.”

Agent – “But ANZ shares are really good shares.”Seller – “Yes they are.”Agent – “So you don’t think that there’s any chance at all that

someone might pay 15% above market value to buy your really good ANZ shares?”

Seller – “No”Agent – “So your house has been on the market for 6 months, with a

feedback range between $250,000 and $270,000. Why would someone pay more than 15% above market value for your house?

“You’re getting lots of inspections, why are you incapable of getting an offer?”A. “Unfortunately although the marketing is drawing the buyers in,

upon inspection your property isn’t comparing well with others in a similar price range. In the buyer’s eyes, the price is too far above the market to even make an offer.”

B. “We are trying to get buyers to see value at your price ($300,000) but unfortunately they are only seeing value at $250,000. Would you be happy for me to bring you offers at market value?”

C. “Buyers are only seeing value at $250,000. I wish I could tell you more but we aren’t seeing that at the moment. Would you like me to see if I can get an offer in writing around $250,000?”

“You told me I would get more”

• “The data that I gave you was approximately 3 months old when I appraised your house.

• We are now 4 months down the track, that means that data is now 7 months old. In today’s market data that is 7 months old is irrelevant.

• At the start of the campaign we were estimating what the price might be. We are not estimating anymore.

• Regardless of what you and I think it is worth it is the buyer who determines the value. My skill is in selling your house, not pricing it.”

“I’ll only take the offer if you drop your commission.”• “Have I been incompetent or given you poor service?• If I had been incompetent or given you poor service I would expect

my pay to be docked.• Do you think it is fair that I have my pay docked due to the market not

being prepared to pay the price you want for your house?”

“You've only taken 3 days to sell my house. Surely there must be a discount for a quick sale ”

• “Would you have preferred that I brought the buyer through on day 90 of the agency instead of day three?”

Apologies for my

efficiency,Thought that was what

you wanted

“You've only taken 3 days to sell my house. Surely there must be a discount for a quick sale.” V2

• “I never feel guilty about getting a quick result for a client. As with most professions we are paid on results, not length of time.”

“You've only taken 3 days to sell my house. Surely there must be a discount for a quick sale.” V3

“Most clients are happy and grateful that luck favours them with a quick result. If you are not happy with the outcome don’t sign the contract.”

The Agent’s job sometimes is simply

to stop an owner from making a dumb decision

(To help someone make up their mind without them actually knowing you helped.)

Next time you get frustrated with unrealistic buyers and sellers• Remember if owners were to ask a reasonable price• And purchasers were prepared to make reasonable offers we would

all be out of a job.

Check out other power points on www.slideshare.net by Tony Morrison