Stop! Don’t Take THAT Listing!

The rationale for Help-U-Sell’s set fee pricing has always been that a sharp, well-informed broker knows roughly how long it will take to sell a properly priced listing and what it’s going to cost to accomplish that task.  There’s a lot in that statement:

Let’s start with ‘well-informed.‘  Set fee pricing begins with a thorough Market Analysis.  You have to know how the market behaves before you know how long and at what cost it’s going to take to sell the average listing.  You have to know the turnover rates, down to the smallest geographical distinction, so you can target effectively.  You have to understand your individual market’s seasonality so you know when to gear up and when to gear down.  Until you know how your market behaves you’re in no position to offer set fee pricing.

Now consider ‘at what cost.‘  A brand new Help-U-Sell broker sets up his first marketing plan as a ‘best guess.’  He has no data on which to judge the effectiveness of any marketing he might do because he’s never done any before.  So he guesses.  And then he does what all true marketing companies do:  he tracks results.  Soon he knows what’s working and what isn’t.  He makes adjustments and continues to track.  Soon he can tell you how many leads each bit of marketing he’s done has produced.  And he makes a few more adjustments.  After awhile, the marketing plan gells,  marketing expense becomes predictable, almost fixed.  It varies, but just slightly and then by plan, not by whim

Marketing is usually the biggest variable on the balance sheet, so once it’s locked down, the broker knows what it costs him to operate on a daily, weekly and monthly basis.  Considering  this figure (plus a reasonable profit) along with:  average days on market, time between contract and closing, % of listings that sell and close, seasonality and the number of listings the office usually has in inventory — the broker can tell you roughly what it will cost to market and sell a properly priced listing at this time of year.  It’s this knowledge that enables the broker to set his fee.

BUT, there’s another key phrase in that opening statement, and it’s the most important of all:  a “properly priced listing.”   A properly priced listing will sell within the average number of days on which your plan was based.  An overpriced listing will take longer — if it sells at all — thus costing you more than you planned to spend. 

I’ve had brokers stop me at this point and argue that a few overpriced listings that take a little longer to sell don’t really cost that much more to market and besides, the sign exposure is a big plus.  OK.  I get that.  Just remember:  every day you have a listing, it’s costing you money.  They aren’t free.  You have an office expense, you have a marketing expense, you have the cost of your time and energy (which, oh by the way, is finite), so the listing that does not perform within the parameters you used in setting up your plan and your fee is a drain.  How many of them can you afford to have? As to sign exposure, how beneficial is it to your image in the marketplace for that For Sale sign to be up month after month until the weeds grow up around the bottom of it, the grommets rust and it begins to lean?

Here’s my point:  you can’t afford to routinely take overpriced listings.  Doing so will absolutely blow your carefully constructed set fee pricing right out of the water and you will lose money.  Should you ever take an overpriced listing?  Sure, but only if it’s close, and only with the seller’s full understanding that you believe it’s too high, and with a commitment to revisit price in 30 days.

One of the things you must do as a Help-U-Sell broker is to become a pricing warrior.  You have to be the Hercules of pricing.  You have to be so strong and convincing when presenting price that your sellers don’t hesitate to follow your lead.  That means you must practice, drill and rehearse your dialogues.  You have to massage your MLS and marketplace stats until they throb.  In short, you have to know your stuff.  And knowing your stuff is always the starting point to delivering excellent service to  your clients.

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