negotiations part 3
TRANSCRIPT
ANSWERING OBJECTIONS
Sometimes “no” really does mean “no,” but other times it can just mean “I’m not sure,” or “I’m
worried.” Looking for the motive behind the “no” is a big part of successfully overcoming
objections.
Objections usually fall into three categories:
Money. The need to make a profit or avoid a loss is a key motivator. Buyers might think a
home is overpriced, while the sellers are convinced they could get a better offer.
Fear. Buying or selling a home can be intense and stressful. People are often afraid to make
a commitment and are wary of contractual relationships.
Distrust. Clients often distrust salespeople. Buyers might think the salesperson didn't show
them enough properties or was wasting their time on properties they can’t afford. Sellers
may not believe that salespeople are placing their interests above the desire to close the
sale quickly.
7 BUYER OBJECTIONS: WHAT YOU SHOULD SAY
Objection #1: The house is too small.
Your response: You can’t make it bigger, so point out a benefit of size. “The room layout is so good that you get a sense of much more space than the square footage indicates.” Or “With energy costs so high, a slightly smaller home will mean lower heating and cooling bills.”
Objection #2: This house doesn’t have a (fenced yard), and I told you I wanted a house with one.
Your response: List all the features the house does have that were requested by the prospect. “You said you wanted a three-bedroom house in Hilldale with an established garden that is within walking distance of the elementary school. This house has all that; adding a fence will not be that difficult.”
"When you hear an objection, smile," says sales trainer Tom Hopkins of Tom Hopkins International, Scottsdale, Ariz. "It means you're getting somewhere." Why would buyers care about a faulty water heater unless they were thinking of buying the house? Why would sellers quibble about a 30- or 60-day listing unless they were thinking of listing with you?
Objection #3: I don’t like the (living room) in the house.
Your response: Ask, "Why?" Then respond to the specific difficulty. For example, if the prospect doesn’t like the color of the room, say, “We could put a clause in the offer that it is contingent on the sellers repainting the room off-white before closing.” If the prospect doesn’t like the number of windows in the room, mention how easy it will be to place larger pieces of furniture in the open wall areas.
Objection #4: I don’t like the location.
Your response: You can’t change the location, but you can try to dispel the idea that it’s not desirable. “There are some great people on this street; your neighbor on the left is a teacher and the blue house is a young doctor and his family. The street has a great block party every year. Or point out that a house in this location is less expensive by a certain amount to one in the neighborhood the prospect requested.
WHAT TO DO WHEN THE SELLER SAYS 'NO'
Review and update your comparable market analysis. Use this data to illustrate why the
buyers’ price makes sense.
Explain real prices. If a buyer pays $5,000 in lender points, a $145,000 sale price is actually
$150,000.
Explain the risk of waiting. The sellers might get a slightly higher offer in the next 60 days, but
what if interest rates go up by then and there are fewer buyers in the market.
Explain the risk of rejecting an offer. If the sellers are presented with an offer of $149,000 on their
$150,000 house and they counter at $150,000, they are gambling $149,000 to gain $1,000.
Emphasize the financial soundness of the buyers. Remind the sellers that a higher price means
nothing if the deal doesn’t close.
Resell the original offer. If the sellers won’t budge, wait two or three days and present the offer
again.
ODD OF SELLINGABSORPTION RATE PRICING/DEMOGRAPHICS OF BUYERS FOR LISTINGS
“There are only a certain number of houses that will
sell in any market in any given period of time. Let’s
see if your house will be one of them.”
ODDS OF SELLING: ABSORPTION RATE PRICING
If 12 homes sold in the last 12 months in a given market that means that the market will absorb 1
house per month on average. If there are 10 homes currently on the market there is a 10 month
supply. A 6 month supply is a balanced market, less is a sellers market and more is a buyers
market.
How to Calculate Absorption Rate:
Find your search area, criteria, price range, target market segment, time for analysis
The longer the time the better the overall average
Shorter times give the latest trends
Detailed searches give more accurate results
How many closed transactions occurred in last 12/6/3 months?
You find this in the MLS
Houses not sides of transactions
ODD OF SELLING: ABSORPTION RATE PRICING
Divide the total closed by the time period.
# homes closed in the last 12 months
# / 12 = # homes closing on average every month
# homes closed in the last 6 months
# / 6 = # per month on the last 6 months
Determine how many houses for sale at this time?
Divide the number of houses for sale by the average closed per month
equals the number of months supply of houses
Our entire MLS SOLD: 12 months 9113 homes sold = 759 per month
Our MLS ACTIVE: 2732/759 = 3.6 months inventory
ABSORPTION RATE MARKET TREND
Criteria for search:_________________________________________________________________
Closed Transactions in Past: 12 Months 6 Months 3 Months
Enter # of Closed Transactions ___________ ___________ ___________
Average Homes Sold Per Month ___________ ____________ ___________
Currently Active in MLS ___________ ___________ ___________
Month’s Supply of Houses ___________ ___________ ___________
As long as NO OTHER HOUSES ENTER THE MARKET!!
HOW TO CALCULATE THE ODDS OF YOUR HOUSE SELLING
To calculate the Odds of Your House Selling you must research your MLS to find the following:
Determine your search area, price range, target market segment, and time for analysis
Six months is a perfect search time. Longer search times give incorrect data because houses drop off the market and return with a different agent and MLS number
How many closed sales occurred in the last 6 months?
HOW TO CALCULATE THE ODDS OF YOUR HOUSE SELLING
Determine the total number of homes that entered the market for
sale in the last 6 months including the current actives.
This would include homes that were listed in the last 6 months
and have expired, withdrawn, pending and closed
Include the current listings no matter when they were listed.
Divide the number closed by the number of listings that were
placed on the market.
ODDS OF YOUR HOUSE SELLING: EXAMPLE
1. Search MLS for all sold homes in the school
district between $250,000 -
$275,000 in the last 6 months.
2. 53 were closed in the last 6 months
3. 128 entered the MLS and were sold, expired, wi
thdrawn or still on the market
4. 53 divided by 128 = 41% of the homes that ente
red the market sold!
ACTUAL MLS EXAMPLE
Zone 400, between $275-$350 = 69 sold last 6 months
Set MLS criteria, go to advanced features and enter listing date: 94
ODDS OF SELLING EXAMPLE
Zone 400, between $275-$350 = 69 sold last 6 months
Set MLS criteria, go to advanced features and enter listing date: 94
69/94 = .734 or 73% chance of selling (homes that entered the market
that actually sold)
Powerful Data
ABSORPTION RATE POSITIONING
Seller: _________________________________________________________________
Address: _______________________________________________________________
Property Description: ____________________________________________________
Profile Buyer for this property: _____________________________________________
Step #1: Define the “Playing Field” through “Profile Buyer’s Eyes” – Using RPR
–Area, neighborhood, zip code, price range, lakefront, schools, etc.
RPR: REAL ESTATE PROPERTY RESOURCE
Fed data from MLS
FREE
Access at www.narrpr.com : Fundamentals of RPR
Let’s take a look: Buyer demographics, evaluating RVM (Realtor
Valuation Model)
http://www.narrpr.com/neighborhoods/ks/andover/67002/52001800-
summary.aspx
Create a report:
https://www.youtube.com/watch?v=c5BTq0QCPyo
ABSORPTION RATE POSITIONING
Step #2: Sold properties in the past 12 months: _______
Step #3: Sales rate (absorption rate) per month: _______
Step #4: Number of properties currently for sale: _______ (+ your house!) = ________
Step #5: At current sales rate, time required to sell all of current properties: ____months
ABSORPTION RATE POSITIONING
Step #6: Odds of Selling within 30 Days through “Profile Buyer’s Eyes”
____ (Monthly sales rate #3) ÷ ____ (properties for sale # 4) = _____% Odds of Selling in 30 Days
Step #7: Positioning your property vs. the competition through “Profile Buyer’s Eyes”:
Condition: ___________________________________ Rating: (1-10)_________
Location: ____________________________________Rating: (1-10)_________
Size (Home site and house): _____________________Rating: (1-10)_________
Features/Amenities: ___________________________Rating: (1-10)_________
Price: _______________________________________Rating: (1-10)_________
ABSORPTION RATE POSITIONING
Step #8: Market positioning through “Profile Buyer’s Eyes”
100% Odds of Selling within 30 Days = Position your house in the Top ______
100% Odds of Selling within 60 Days = Position your house in the Top ______
100% Odds of Selling within 90 Days = Position your house in the Top ______
As long as no other houses change their price and no new houses enter the market!
POWER QUESTIONS
By what date do you need to move?
By what date do you want to have your house under a sales contract?
Do you know how long it will take to go from Contract to Closing?
Based on the Absorption Rate, how long could it take to sell your house?
Based on the Absorption Rate, where do you think we should position your
house?
Do you think that positioning will get you where you want to go on time?
What position in the market will it take to get you where you want to go on
time?
If your house doesn’t sell in the time frame you have described to me, what is
you plan B?
NEXT WEEK
The Offer
Prospects Into Buyers
Prepare to Present
Presentation Strategies
Elements of a Standout Offer
Contingency Clauses
How to Handle Multiple Offers
Q&A: Listing Agent's Duties
For Fun: https://www.youtube.com/watch?v=jrkRr-2OZsw