Pricing Strategy Class

Pricing – A Call to ActionPricing – A Call to Action

By: Steve Tufts

Tufts Realty Associates

Atlanta-Sugarloaf Market Center

QUICKLY: Understanding the MarketQUICKLY: Understanding the Marketon a on a macromacro level level

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

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

$300,00019

78

1982

1986

1990

1994

1998

2002

2006

$268,300 in 2006

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 mill ion units2.22 mill ion units



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

New New HomesHomes(North At lanta (North At lanta

Area)Area)

81698169 63156315 -23%-23%

Ga MLSGa MLS 24,38624,386 18,13318,133 -26%-26%

So, Check Your Atti tude…So, Check Your Atti tude…

Long-term successful agents Long-term successful agents shouldn’t care if the market is shouldn’t care if the market is

up or down, they should always up or down, they should always act l ike it ’s down.act l ike it ’s down.

7

Why?Why?

Because down markets Because down markets always always forceforce you to you to focusfocus

on what really matters!on what really matters!

8

Two GREAT Books by Jim Two GREAT Books by Jim Coll ins:Coll ins:

““Built To Last”Built To Last”

““ Good to Great”Good to Great”

9

From ‘From ‘ Good To GreatGood To Great ’:’ :

One of the f irst steps to One of the f irst steps to greatness is gaining a ful l greatness is gaining a ful l

understanding of - understanding of - ““ THE BRUTAL TRUTH”.THE BRUTAL TRUTH”.

10

BRUTAL TRUTH:BRUTAL TRUTH:Experts say that about 80% Experts say that about 80% of the REAL marketing of a of the REAL marketing of a

house occurs when the house occurs when the l ist ing price is established.l ist ing price is established.

11

BRUTAL TRUTH:BRUTAL TRUTH:Experts estimate that about Experts estimate that about 60% of the real Buyers for a 60% of the real Buyers for a home wil l view it in the f irst home wil l view it in the f irst

30-45 days it is on the 30-45 days it is on the market.market.

12

BRUTAL TRUTH:BRUTAL TRUTH:If i t isn’t priced right from the If i t isn’t priced right from the

beginning, you are f ighting beginning, you are f ighting an uphil l batt le.an uphil l batt le.

13

BRUTAL TRUTH:BRUTAL TRUTH:When supply exceeds demand:When supply exceeds demand:

Prices go downPrices go downBuyers are more choosyBuyers are more choosySellers are more irr i tableSellers are more irr i tableLenders and appraisers are more Lenders and appraisers are more unpredictableunpredictableThe strong (smart) wil l surviveThe strong (smart) wil l survive

14

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

BRUTAL TRUTH:BRUTAL TRUTH:Even the big MEGA Teams need Even the big MEGA Teams need

a dose of the brutal truth a dose of the brutal truth sometimes….sometimes….

A CASE STUDY – Tufts Realty A CASE STUDY – Tufts Realty Associates, Atlanta SugarloafAssociates, Atlanta Sugarloaf

16

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 ClientsWhere’s all the business??

17

Tufts Realty AssociatesTufts Realty AssociatesMid-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 Act2006 Act2007 Goal

Tufts Realty AssociatesTufts Realty AssociatesMid-Year 2007 Cumulative Volume vs. GoalMid-Year 2007 Cumulative Volume vs. Goal

0

10

20

30

40

50

60

70


2007 Act2007 Goal

A Call To Action:A Call To Action:Tony DiCello Class in OrlandoFierce conversation with TeamStopped spending on marketingUpdated CMA’s – REALISTIC!!Prepared a plan and scriptsAnalysis (macro) of market

20

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 pages21

Action:Action:At the middle of May:

35 ListingsSet a goal to do this for 7/monthGot 7 price reductions in late May,

another 7 in early JuneAnother 5 or so in July (because

we were getting busy!!)22

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

Market Analysis of Supply and DemandMarket Analysis of Supply and Demand

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

Results:Results:August: Closed $13.6 million, 19

transactions:All listing sides had been from price

reduction actionAbout half were “fierce conversations”

about preparation and motivationA few “fierce conversations” with Buyers

and their AgentsNo commission reductions

26

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

Question:Question:

Where are al l of the qualif ied Buyers????

28

Answer:Answer: Sitt ing in overpriced l ist ings wait ing for them to sell !!3 of the sold listings produced qualified Buyers that completed

immediate transactions

29

Tufts Realty AssociatesTufts Realty Associates2007 Monthly Volume vs. Goal2007 Monthly Volume vs. Goal

0

2

4

6

8

10

12

14


2007 Act2006 Act2007 Goal

Tufts Realty AssociatesTufts Realty AssociatesMid-Year 2007 Cumulative Volume vs. GoalMid-Year 2007 Cumulative Volume vs. Goal

0

10

20

30

40

50

60

70


2007 Act2007 Goal

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

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

-The End-

Documents

Pricing Strategy Class