Giving our clients good pricing advice

A year ago, I was in car accident. I was on Kinderkamack road in Emerson, and stopped because a line of geese were crossing the road (new rule: drive over the geese), and a woman who apparently wasn’t paying such careful attention smashed into the back of my car.  She pretty much destroyed the rear end of my car, virtually totaling it.  It took about three months to get the car fixed, and I had some residual neck pain for a few months.

Being a litigious sort, since I’m an attorney, my thoughts naturally turned to whether I had a claim against her for liability.  Three months of not having a car, an increase in my insurance rates (even though the accident was clearly not my fault), and some personal injury.  I would have thought it was worth something.  So I called a few attorney friends, including my cousin John Rand, a crack personal injury attorney in White Plains.

In about a 20-minute conversation, he explained to me that I didn’t have a case.  Something about New York’s and New Jersey’s no-fault policy for these types of auto accidents.  So I dropped the issue.

I thought about that recently when I was talking to some agents about how they help a client price a home.  When a seller comes to an agent for advice about selling a home, one of the biggest concerns is the price — the seller obviously wants to get the highest price possible.  Often, the agent is in the position that my cousin John was in, delivering some bad news about the viability of those hopes.  Just like John had to tell me that I didn’t have a legal claim despite my injuries, an agent has to explain to a seller the realities of the housing market.

Unfortunately, it’s not easy telling a client what she doesn’t want to hear.  And I think that in a lot of cases, agents aren’t able to do the job they’re supposed to do in helping their client understand the realities of the situation.  John would not have done me any favors if he had told me I had a viable case, and then induced me to spend time and money pursuing it.  Similarly, an agent doesn’t do her client any favors when she allows that seller to price the home at an unsustainable level.  The home isn’t going to sell, and the client isn’t going to have a good experience.

Why do we do that? Maybe it’s because we naturally shy away from being pegged with that stereotype that all real estate agents want to do is underprice their listings to get a quick sale.  Maybe we’re defensive about presenting a price. Or maybe it’s just because sellers don’t trust their broker to give them solid advice and counsel the way that I trusted my attorney to give me his advice.

Whatever it is, we do our sellers a disservice when we allow them to overprice their homes.  We’re not helping them, or, for that matter, ourselves.

So what do we do?  I’m working on a pricing presentation that tries to educate and explain the fundamentals of pricing to a seller, in the interests of actually doing our job.  If you have suggestions, I’d love to hear them.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to FurlAdd to Newsvine