What Every Agent Does Wrong When It Comes to Setting a List Price

You already know that when you’re working with sellers, the pricing conversation is crucial. It has a massive effect on how successful the listing will be.

But did you also know that this conversation can set the tone for the rest of your relationship with the seller?

When handled with Tactical Empathy from the start, the pricing conversation can provide you and your client with a solid foundation for further collaboration throughout the transaction.

On the flip side, pushing your client toward a price they’re not comfortable with, or taking a listing at a price that you don’t believe in, sets you up for distrust, discomfort and conflict.

Here’s something that agents have a very difficult time accepting…

Pricing the home is not your responsibility—it is the responsibility of your seller.

Your responsibility is to lay out the landscape for them in terms of how the market, based on your experience, may respond to the price they have in mind.

You can share, if asked, your perspective as to what you might choose to do if it were your home.

But in the end, the decision is theirs to make. 

It is then your responsibility to determine—based on your own business standards—whether or not you want to take the listing at the price the seller has chosen.

Your first conversation about price may take place during your New Client Discovery Call. When they’re sharing their hopes and dreams, it’s likely that price will come up. You may have discussed a potential price range during that first call, or in a subsequent meeting prior to signing the listing agreement.

Now it’s time to determine the final list price.

How do you approach this conversation?

1️⃣ Start with a Summary.

A Summary is a thorough, detailed review of what they have told you so far around the subject of pricing. Be sure to include all the thoughts, feelings, hopes, and concerns they’ve already articulated. This demonstrates that you’re listening closely, which helps them feel understood. 

It may sound something like:

“So far you’ve told me that your priority is to get the home sold as quickly as possible. We’ve discussed that your neighbor’s house sold for 2.8MM last year. You feel like your home has a much nicer outdoor space. We’ve discussed that the neighbor’s home was more recently renovated. You decided to make some strategic repairs and to invest in staging to maximize the value of your home. You’ve told me that your worst fear is getting stuck on the market for months. You’re relying on the proceeds of the sale to purchase your next home. As a result, you feel that renting the home out is not an option for you. You need to sell.”

2️⃣ Then, invite your client to share their thoughts on price.

“You’ve probably done a lot of thinking about the price. Would you mind walking me through what you’re thinking?”

The conversation can take a few different roads from here.

(A) They’re unsure as to how to proceed, and they ask for your guidance.

(B) They’re ready with a number that they’re confident in sharing—but you feel that price is not in line with the market.

(C) They’re ready with a number that they’re confident in sharing, and that price works well with your read of the market.

➡️ Let’s start with scenario A.

They’ve said to you something along the lines of, “We’re looking to you for guidance. You’re the expert.”

When a client is asking for your opinion, it’s tempting to jump right in with it. After all, they asked you! And you are the expert…

But you do NOT want to fall into the trap of sharing your opinion too soon.

Remember what you give up by providing your opinion first. You lose the benefit of letting them clear their minds. You lose the benefit of gaining greater understanding of how they may be thinking about the situation. You lose the benefit of making them feel understood and gaining their trust.

 As I keep saying…you don’t need to think for them. You need to understand what they’re thinking.

So reassure them that you will give them all of your thoughts and opinions, but before you do, invite them once again to share what they’re thinking. 

That might sound something like this:

“It sounds like you’re really interested in my opinion/guidance. I will absolutely share that with you. Before I do that, would it be a horrible idea for you to tell me what your ideal price would be?”

99 times out of 100, if this is a client with whom you’ve been employing Tactical Empathy from the start, and you have established trust, they will share with you what they are thinking at this point.

Hear them out. Don’t interrupt. Resist the temptation to show approval or disapproval. Just listen.

➡️ If they give you a number that’s quite high, now you’re in scenario B.

They may even acknowledge that it’s their ideal price, but they know it’s slightly unrealistic. Great. Whatever number they’ve given you, this is now an anchor at the high end that you can work from. 

Let’s say they’ve said $3M is their ideal price, and let’s say your market analysis lands you at a potential price range of $2.5-2.7M. 

Go back in for some information about their pain point.

“So it sounds like $3M would be ideal. What, if you don’t mind my asking, what price would be a horrible outcome for you? If $3M is your dream, what is your nightmare?”

Let’s say that they respond with $2M.

“OK, so, it sounds like, if you could get under contract at $3M you’d be very happy, and at $2M you’d rather set the house on fire.”

You may get something like, “That’s right!”

“At $2.2M, you’re probably still not interested in moving forward. Am I wrong about that?”

You may get something like, “No, you’re not wrong.”

“What if the best buyer is only willing to pay $2.5M? How would you want to proceed in that case?”

At this point, you’re narrowing in from the anchor points, and you’ll start to get more detailed information as to their true feelings on price. 

In fact, they may be discovering their true feelings on price, in real time, by moving through this exercise with you.

At every step, make sure to ask how they will feel or how they would want to proceed at ‘X’ price.

You can work from either end: top down or bottom up. By working from the bottom up, though, you are gaining the benefit of spending more time voicing these low, potentially frightening numbers which helps to defuse their power.

This conversation should get you to the price at which your seller feels most comfortable, at least for now.

If you’ve gone through this anchoring process, and your seller continues to gravitate toward a price which you feel is out of step with the market, or which may pose certain challenges in terms of your client’s own stated priorities, you might choose to continue exploring a bit further.

(No one is going to thank you for saying “I told you so” a few months down the road.)

You might use a Focused Comparison, which sounds like this:

“On the one hand, you’ve told me that your highest priority is to sell quickly, and that your greatest fear is to get stuck on the market. On the other hand, you’re interested in a listing price that’s higher than all of your competition. How do those two things go together?”

**Warning label on delivering focused comparisons: Make sure to ask the question out of true curiosity and use an Accommodator tone of voice. Otherwise you run the risk of sounding aggressive or sarcastic, which would be counterproductive.

3️⃣ When it’s clear that you’ve uncovered all of your client’s motivations, and they seem confident in their choice of a listing price, make sure to manage expectations around the potential market response.

This is crucial even if you’re confident that their chosen price is well-aligned with the market. No matter how well you think you understand the market, you can never be 100% certain how a listing will be received, and your seller needs to understand that.

This might sound something like:

“When we list the property, 3 things may happen:

1. We might have showings and offers right away.
2. We might have showings but no offers.
3. We might experience silence.”

Establish how frequently you’ll communicate activity, and tee-up the plan to revisit the listing price at X days in, should you experience either silence, or showings but no offers.

Remember: predictability = trust.

The more predictable you can make things, the more your clients will trust you.

Never let them wonder when they are going to hear from you.

If you have no news, deliver exactly that, “I’m calling to say that there is no news.”

Throughout this conversation, be mindful not to throw the baby out with the bathwater.

When agents first begin to hear and accept the fact that setting the price is not their responsibility, they often find themselves going too far in the opposite direction; they neglect to properly lay out the landscape or to pose crucial concerns for their client’s consideration.

As with anything, it’s about finding the proper balance.

You have a responsibility to point out any obstacles they may not have not fully considered, especially if those things could negatively impact their goals. (Remember: their goals not yours.)

The challenge for you is to navigate a balance between allowing the seller their autonomy in setting their own price, and not allowing them to make missteps based on a lack of information or the appropriate professional guidance.

Whenever  you find yourself slipping into convincing or pushing, remember to cling to your curiosity rather than your fear.

Have a great weekend!

Laurie

PS - If you want to truly master these conversations, join us in the Daily Accountability Calls, where we role play them live every day. You can test drive the program for FREE for 14 days—click here to start your trial.