Regardless of the price range you serve, sooner or later you’ll get stuck with “a listing impossible” because the sellers refuse to do what’s needed to get the property sold. CNBC’s new series, Listing Impossible, is packed with takeaways about how to confront this thorny issue.
Known for making tough sales, Aaron Kirman and his team of 60 entrepreneurial agents, have sold over $5.5 billion of luxury real estate. Kirman attributes his success to telling sellers the hard truths that they don’t want to hear.
The ‘cold box’ with the ‘sex dungeon’
Kirman takes “telling the truth,” to an entirely new level. When he drove up to the property, he called it a “cold box” sandwiched between two magnificent Mediterranean houses.
As he walked through the property, he told the seller how ugly the dark brown sofas were in the living room and how inappropriate they were for a beach house with a spectacular view.
The master bedroom was also decorated in masculine colors including quite a bit of black. Kirman took one look and labeled the master a “sex dungeon.” Making matters worse, the kids had to walk through the sex dungeon to get to their bunk beds in the adjoining bedroom.
When Kirman went out on the deck outside the master, there wasn’t a single piece of furniture where the owner could sit out and enjoy the view. He plopped down on the deck to make the point.
Furthermore, the pool was tucked in a covered area with little sun exposure. Making matters worse, the next door neighbor’s property had multiple windows and balconies looking down on the property’s pool area. As Kirman rightly pointed out, “At this price point, people expect privacy.”
The fix was $15,000 worth of staging and about $200,000 worth of bamboo to make the backyard private. Kirman estimated that this would net the seller an additional million dollars.
The seller not only balked at the bamboo — she claimed she didn’t have the $15,000 to stage the property.
3 alternatives to Kirman’s method
When a seller cannot afford to stage the property, you have to get creative about how you stage. Although Kirman didn’t offer this, it’s common for many agents to pick up some or all of the staging costs when they really want the listing.
A second alternative you could use on your own impossible listing, would be to use an augmented reality staging app in conjunction with a landscaping app such as iScape. These apps allow prospective buyers to see how the house would look staged as well as to experiment with different landscaping solutions.
A third alternative, especially if the property needs a kitchen or bathroom model, is to go Home Depot or Lowe’s and have them use their in-store planning software to provide both a picture and an estimate as to how much a remodel would cost. If the buyer wants a pool, you could obtain a rendering and a bid from at least two pool contractors as well.
Overcoming the swoon factor
The most common reason any agent ends up with a “listing impossible” is that they aren’t strong enough to overcome the seller’s price objections. This is especially true in the luxury market.
Agents are so often eager to land that big commission, that they’re too intimidated or lack the skills to tell the seller the truth about the price, the condition and what will be required to sell the property.
Kirman’s approach was one used by most agents — comparing the $13.9 million asking price to the competing properties that were priced at $8,910,000 and $7,125,000, plus $5,350,000 for a large vacant lot nearby. There were no comparable sales to support such a high price.
Furthermore, properties were languishing on the market, and little was selling. This typically results in even more downward pressure on prices.
Although Kirman didn’t use these exact words, his point was clear: You’ve had this property on the market for over 1,000 days with multiple agents. The bottom line is the market has rejected your price, the condition of the property or both.
Overcoming the ‘We paid X for the property’ objection
Many sellers believe that what they paid to build or acquire the property should influence how much a buyer should pay. Most agents know that this is the case, but the issue is, how do you overcome the objection?
The following script works extremely well, especially if you’re dealing with your client’s business manager, CPA or attorney:
Seller, the real estate market is like the stock market. It’s the buyers who determine the selling price, not the sellers or the agents. To illustrate this point, if you bought IBM stock five years ago at $100 per share, and today it’s trading at $75 per share, you have two choices. You can sell at today’s prices, or you can wait for the market to improve.
‘To close at that price, we’ll have to bring money to the closing’
Kirman seemed to blow past the seller’s remarks that the house was the bulk of her entire divorce settlement. She explained that she would have to bring cash she didn’t have to the closing if they couldn’t sell at her current price point.
When a seller makes this objection, follow up by asking: “What is the quality of your alternatives?”
It all comes back to this one simple fact: The owners can either sell at today’s prices or continue to bleed money while they wait for the market to improve.
Luxury agents still need ‘bread-and-butter’ deals
Another major takeaway from Listing Impossible is that you need “bread-and-butter” listings to have a sustainable cash flow in your business. Working on only top-tier listings is poor strategy in that regard. This is partially due to the market slowdown and how long it takes these properties to sell. Kirman repeatedly drove this point home as he worked with the agents on his team.
Putting it a little bit differently for agents who work lower price ranges, it’s much easier to sell four $250,000 houses than a $1 million home.
What happened
Kirman successfully persuaded the owner to list the house for $8.9 million and to do the $15,000 in staging.
The “sex dungeon” was staged with a light and airy beach theme, as was the rest of the house. The deck outside the master was staged with furniture that did not obscure the view, making it into an ideal area to relax and unwind. The kids’ room off of the master became a private office.
About 30 days after Kirman took the listing, the seller received an offer of a little over $8.8 million that she ultimately accepted.
Catch Listing Impossible on Wednesdays at 9 p.m. Eastern on CNBC or streaming online.
Bernice Ross, President and CEO of BrokerageUP and RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at BrokerageUp.com and her new agent sales training at RealEstateCoach.com/newagent.
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