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Pricing Strategy Class

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Pricing Strategy Class

  1. 1. Pricing – A Call to ActionPricing – A Call to Action By: Steve Tufts Tufts Realty Associates Atlanta-Sugarloaf Market Center
  2. 2. QUICKLY: Understanding the MarketQUICKLY: Understanding the Market on aon a macromacro levellevel
  3. 3. U.S. Existing Home SalesU.S. Existing Home Sales 0.0 2.0 4.0 6.0 8.0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Millions 6.48M transactions in 2006 3
  4. 4. U.S. Average Existing Home Sales PriceU.S. Average Existing Home Sales Price 4 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 1978 1982 1986 1990 1994 1998 2002 2006 $268,300 in 2006
  5. 5. SupplySupply Number of homes on the market –Number of homes on the market – U.S.U.S. 5 DateDate InventoryInventory 12/0412/04 2.22 million units2.22 million units 12/0512/05 2.85 million units2.85 million units 12/0612/06 3.51 million units3.51 million units
  6. 6. SupplySupply Atlanta Market Conditions:Atlanta Market Conditions: (Source: Atlanta Business Chronicle, Aug. 3, 2007)(Source: Atlanta Business Chronicle, Aug. 3, 2007) 6 SalesSales 2Q’062Q’06 2Q’072Q’07 % Diff% Diff NewNew HomesHomes (North Atlanta(North Atlanta Area)Area) 81698169 63156315 -23%-23% Ga MLSGa MLS 24,38624,386 18,13318,133 -26%-26%
  7. 7. So, Check Your Attitude…So, Check Your Attitude… Long-term successful agentsLong-term successful agents shouldn’t care if the market isshouldn’t care if the market is up or down, they should alwaysup or down, they should always act like it’s down.act like it’s down. 7
  8. 8. Why?Why? Because down marketsBecause down markets alwaysalways forceforce you toyou to focusfocus on what really matters!on what really matters! 8
  9. 9. Two GREAT Books by JimTwo GREAT Books by Jim Collins:Collins: ““Built To Last”Built To Last” ““Good to Great”Good to Great” 9
  10. 10. From ‘From ‘Good To GreatGood To Great ’:’: One of the first steps toOne of the first steps to greatness is gaining a fullgreatness is gaining a full understanding of -understanding of - ““THE BRUTAL TRUTH”.THE BRUTAL TRUTH”. 10
  11. 11. BRUTAL TRUTH:BRUTAL TRUTH: Experts say that about 80%Experts say that about 80% of the REAL marketing of aof the REAL marketing of a house occurs when thehouse occurs when the listing price is established.listing price is established. 11
  12. 12. BRUTAL TRUTH:BRUTAL TRUTH: Experts estimate that aboutExperts estimate that about 60% of the real Buyers for a60% of the real Buyers for a home will view it in the firsthome will view it in the first 30-45 days it is on the30-45 days it is on the market.market. 12
  13. 13. BRUTAL TRUTH:BRUTAL TRUTH: If it isn’t priced right from theIf it isn’t priced right from the beginning, you are fightingbeginning, you are fighting an uphill battle.an uphill battle. 13
  14. 14. BRUTAL TRUTH:BRUTAL TRUTH: When supply exceeds demand:When supply exceeds demand: Prices go downPrices go down Buyers are more choosyBuyers are more choosy Sellers are more irritableSellers are more irritable Lenders and appraisers are moreLenders and appraisers are more unpredictableunpredictable The strong (smart) will surviveThe strong (smart) will survive 14
  15. 15. BRUTAL TRUTH:BRUTAL TRUTH: Most agents resist doing anything about it. Don’t know the “brutal truth”. Afraid to have “fierce conversation”. Don’t know how to prepare analysis. Don’t want to upset clients/lose listing. Lazy, naïve, “busy”, waiting, blah, blah. They aren’t likely to make any money any time soon. 15
  16. 16. BRUTAL TRUTH:BRUTAL TRUTH: Even the big MEGA Teams needEven the big MEGA Teams need a dose of the brutal trutha dose of the brutal truth sometimes….sometimes…. A CASE STUDY – Tufts RealtyA CASE STUDY – Tufts Realty Associates, Atlanta SugarloafAssociates, Atlanta Sugarloaf 16
  17. 17. Tufts Realty Associates:Tufts Realty Associates: Most listings ever – YEA!! Most Agents ever – YEA!! New Marketing Manager ($60k) New Marketing Plan ($ 5k/mo.) Getting hammered by Clients Where’s all the business?? 17
  18. 18. Tufts Realty AssociatesTufts Realty Associates Mid-Year 2007 Monthly Volume vs. GoalMid-Year 2007 Monthly Volume vs. Goal 0 2 4 6 8 10 12 J F M A M J J A S O N D 2007 Act 2006 Act 2007 Goal
  19. 19. Tufts Realty AssociatesTufts Realty Associates Mid-Year 2007 Cumulative Volume vs. GoalMid-Year 2007 Cumulative Volume vs. Goal 0 10 20 30 40 50 60 70 J F M A M J J A S O N D 2007 Act 2007 Goal
  20. 20. A Call To Action:A Call To Action: Tony DiCello Class in Orlando Fierce conversation with Team Stopped spending on marketing Updated CMA’s – REALISTIC!! Prepared a plan and scripts Analysis (macro) of market 20
  21. 21. Analysis of Market:Analysis of Market:  Its easier than you think, 2-4 hours.  Select a relevant large market area  From MLS, collect data on number of listings and number of solds over the past several years (3-4 years is best).  Prepare a graph/pictorial view of the market (Excel is all you need).  Make it simple and colorful – 1-2 pages 21
  22. 22. Action:Action: At the middle of May: 35 Listings Set a goal to do this for 7/month Got 7 price reductions in late May, another 7 in early June Another 5 or so in July (because we were getting busy!!) 22
  23. 23. An Easy “Fierce Conversation”:An Easy “Fierce Conversation”: “Mr. Lister, I am here today to discuss the trends in our market and share some factual data with you. This is not necessarily data that you are going to want to see, but as your Realtor, it is my responsibility to share information that you NEED TO KNOW in order for us to make the best decision about SELLING your home as soon as possible. Okay?” 23
  24. 24. Market Analysis of Supply and DemandMarket Analysis of Supply and Demand
  25. 25. An Easy “Fierce Conversation”:An Easy “Fierce Conversation”: “Mr. Lister, studies show that about 50-60% of all REAL buyers will see your home in the first 30-45 days it is on the market. As you can see, there is a lot to look at right now. Buyers have lots of choices and the media has told them that they can get a good deal right now. If a home is not priced and prepared to sell, they will quickly go elsewhere. What choices do you see based upon this information …….” 25
  26. 26. Results:Results: August: Closed $13.6 million, 19 transactions: All listing sides had been from price reduction action About half were “fierce conversations” about preparation and motivation A few “fierce conversations” with Buyers and their Agents No commission reductions 26
  27. 27. Results:Results: August Commissions: $350,000!! Activity is up!! Morale is highest in several years. Side Benefit: Buyers Agents! Used technique and data to make offers look more reasonable 27
  28. 28. Question:Question: Where are all of the qualified Buyers???? 28
  29. 29. Answer:Answer: Sitting in overpriced listings waiting for them to sell!! 3 of the sold listings produced qualified Buyers that completed immediate transactions 29
  30. 30. Tufts Realty AssociatesTufts Realty Associates 2007 Monthly Volume vs. Goal2007 Monthly Volume vs. Goal 0 2 4 6 8 10 12 14 J F M A M J J A S O N D 2007 Act 2006 Act 2007 Goal
  31. 31. Tufts Realty AssociatesTufts Realty Associates Mid-Year 2007 Cumulative Volume vs. GoalMid-Year 2007 Cumulative Volume vs. Goal 0 10 20 30 40 50 60 70 J F M A M J J A S O N D 2007 Act 2007 Goal
  32. 32. A Call to Action for You:A Call to Action for You: Set a numerical GOAL for getting prices adjusted. Hang it on the wall in big letters. Face the “brutal truth” about your market. Face the “brutal truth” about your listings. Prepare a factual analysis of market trends. Do a rolling average to smooth the data. Rehearse some scripts for the “fierce conversation”. Have a revised CMA with you with recent and realistic comps. Review it with another agent. Be ready to stop “actively” marketing some listings. Be ready to sell the others!! 32
  33. 33. JUST DO IT!!JUST DO IT!! (It doesn’t hurt as much as not making any money.)(It doesn’t hurt as much as not making any money.) 33
  34. 34. 34 -The End-

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