The following article written by Matt Jones was originally published in Broker Agent News on November 4, 2005. It is copied here in its entirety as it was originally published. While non-commercial use of this copyrighted material is encouraged, unauthorized, commercial use is strictly prohibited.

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INSIDE PART THREE

* WHAT TO SAY AND HOW TO SAY IT
* TAKING LISTINGS OVER THE PHONE
* REAL-LIFE EXAMPLES

In the previous two parts (link to part one - link to part two) of this article we focused on how to become the best agent for the job. We mentioned the necessity of learning market statistics, and how and where to find them. We discussed how you can increase your credibility and power by arming yourself with this basic and relevant knowledge. Next we determined the best way to build an accurate CMA, or comparative market analysis, and then we touched on the theory behind my listing presentation. If you’ve been studying the information, you know how and why this presentation works.

Now, in the third part of this series, I will show you how to present my listing plan to a seller client. I ask you to print it out and read with pen or highlighter in hand, and to take notes. You should expect to review the material again and again until it has been fully absorbed. And if you do, I promise that you’ll be listing properties at 8% or more - every time!

What to Say and How to Say It

I want you to pretend that you’re the listing agent in this story. It may not be a true story for you yet, but it could be. It’s worked for me countless times.

Imagine that it’s a Thursday morning. You’ve just come into the office and noticed a CMA request that arrived from your website overnight. If you’re like most agents, that kind of good news doesn’t happen often; but, in my case, not a day goes by that I don’t receive one or two CMA requests from potential sellers - and all because of the technology that I use to capture traffic from my website.

But once again I’m getting ahead of myself. We’ll discuss how to have an unending supply of listing leads, as well as buyer leads, in a future article. For now, let’s stick with the listing presentation.

Okay. So it’s Thursday morning, and you have a new CMA request in your inbox. The first things you do are to pull up the tax value and print out the tax sheet, which will tell you a lot about the property and the CMA request. Using the tax records and the appreciation rates for that area, you determine the approximate value of the home.

Next you log into your MLS database and pull up all the closed comparables for the seller’s subdivision, with the approximate size and number of bedrooms and baths. There are twenty-one comparables to use and only one obvious distressed sale, so you eliminate that one from the average. After finding an average for the other twenty, you print out the comps in a one-liner format and note the “average” price on the page.

Next you pull up all the active comparables listed in the MLS (three, in this case), average them, print out the query, and write down the average price.

Now add the three prices that you’ve written down, and divide by three. Obviously, this is your average sale price. Multiply it by 5%, and add the amount to the average for the high end of your reasonable range. Then subtract 5% from the average to give you the low end of the range. In a matter of minutes, you’ve completed a very thorough CMA that’s beyond scrutiny. That’s a good first step.

So now you call the seller and thank him for visiting your website. You tell him that you received his home-valuation request and that you’re in the process of compiling data to determine the home’s value. I generally tell the seller that I’ve seen nice homes and bad homes, as well as some in the middle, and I’d like to know where, really, his home is. I ask him to pretend that I’m Stevie Wonder and to give me a verbal tour of the place, since I’m not actually there to view it.

I allow him to take me from room to room, all the while asking him for specifics about the home’s curb appeal and other possible attractions. After touring the house, we next “go” outside, where I have him talk me through the yard, the exterior paint, the roof, the overall condition, the immediate neighbors’ homes, and the landscaping.

Then I generally say something like, “Gosh, that sounds like a really nice house! Why on earth would you want to sell it?” The response I get is very important because it can provide me with the seller’s motivation and, often, his time frame.

Trying to determine whether or not the seller has a realistic grasp of the situation, I then ask him if he has any idea what price should go on the house. Sometimes sellers aren’t completely practical about these things (I bet you already knew that!), but generally they are. And if a seller isn’t a realist, he will likely believe that his home is worth much more than the initial CMA would indicate. So then I proceed with something like this: “Wow! You must have a really nice house. I’m looking at every single home that’s been sold in your neighborhood during the past year, and I’m not seeing anything within $15,000 of that price. Can you help me understand what features your home has that make it stand out so much?”

Many times he’ll tell me that the house down the street sold for that much even though it isn’t nearly as nice as his. Generally, however, the seller down the street just didn’t want anyone to know he had to sell his house for much less than he’d been asking. But now that you have the comps in your hand, you can tell the seller exactly what a house sold for, and sometimes that little fact is all you need to introduce some reality into the situation. On the other hand, sometimes your potential client’s home actually is worth more than you would’ve expected, so you also need to be open to what he tells you. On those rare occasions, you should be prepared to tweak your CMA a little.

Now that you know the seller’s motivation, his time frame, and his opinion of the property’s value (it could even be that he had a recent appraisal, which he’s now using to test you), you can tell him that you’ll complete your research and then call him back with your valuation. Simply set up an appointment, and either call or visit in person.

Taking Listings Over the Phone

Yes, you read it right! In fact, I’ve taken roughly 85% of all my listings over the phone! And you can do the same thing with this approach. Okay, so you have the listing appointment and the information you need going in: the value of the home, the seller’s motivation, his time frame, and his expectations. Now it’s time to nail the presentation. Before we get into the actual interchange, though, let’s talk about what the seller is expecting (and what virtually every other agent is gearing up to give him).

The seller’s expecting you to come in and tell him how great his house looks. He’s expecting you to tell him how terrific your company is (and it may be!). He’s expecting you to tell him how great an agent you are and how many zillion dollars’ worth of property you’ve sold. He’s expecting you to tell him his kids are cute. He’s expecting you to tell him he needs to fix this and that. He’s probably sold a house before, he’s already talked to an agent, and/or he’s talked to friends who’ve been through the process. So let’s assume that he plans to interview several agents, as many sellers are doing nowadays.

The single most powerful thing you can do is surprise him. Remember: you want to look at what everyone else is doing, and then do the exact opposite. What do I mean? Other agents will talk about themselves. You need to talk about the seller. Other agents will extol the virtues of their companies, and in nebulous terms they’ll explain how they plan to sell the house. You need to talk about different strategies for selling the house and then show the seller exactly what the process will mean to him in terms of DOM and selling price.

But back to the listing presentation. When you arrive at the home, quickly introduce yourself, and then tell the seller that you’re very sorry, but you don’t have a lot of time, and you want to make the most of what you do have. (He’ll be thrilled because he’s been expecting this ordeal to go on for hours!) Now, let’s hope you get lucky, and he says, “I’m talking to ‘Agent X,’ and he says he’ll list the house for 5%. How much do you charge?”

At this point I’d tell the seller, without hesitation, “I try to get 100%” - and then I wouldn’t say a word. After about ten seconds (which feels like an eternity!), he’ll usually start laughing. Then I’ll politely say, “Regardless of what anyone may tell you, there are two parts of selling your home that are completely under your control: the commission and the selling price. And what price and what commission you choose will largely depend on the type of strategy you decide to use. Do you know what I mean by that?” (Invariably he’ll say no, which is perfect. What he’s just now done is set me up!)

“Mr. Seller, here’s what I mean. There are 1100 agents in our market, and I guess what that translates into is that there are 1100 different ways to sell your house. But the truth is that all those different approaches really boil down to just two different strategies: you can sell your house by price, or you can sell it by traffic. Does that make sense? (At this point, either he’ll say no, or he’ll guess wrong.) Well, here’s what I mean. If you were to go to (name of the biggest local bookstore) and find the real estate section, you could see lots of different books on how to be a top agent. And each of those books would teach you one single way of selling houses. It’s the ‘traditional’ approach, and nearly all the agents have used it for years. I call it ‘the price approach’ because it uses the price to sell your house.”

“Here’s what I mean by that. A house isn’t like a loaf of bread or a share of stock. You can’t go to the computer or call someone on the phone and get a price for it. The price on a house is much more subjective, and it’s somewhere within a ‘reasonable range.’ Let’s say, for example, that some imaginary house is worth $100,000. It’s not actually worth $100,000, though; it’s worth between about $95,000 and $105,000, depending on the motivations of the buyer and the seller. Now, if you start listing the price very much over $105,000, everyone will pretty much agree that it’s too high. And, by the same token, if the price drops down below $95,000, everyone will agree that it’s a great deal.”

“The way we’ve all been taught - what all of us real estate agents have been taught - is to convince you, the seller, to list your house at the low end of that “reasonable range.” That way, the price can be used to motivate a buyer to write an offer. If the home doesn’t sell in a month or so, we’re supposed to go back to you and ask you to reduce the price, telling you that the market has spoken and that your house must not be worth as much as you’d thought. Then you agree to reduce the price, and we wait. In another month, if the house still doesn’t sell, we reduce the price again. Eventually, we’ll suck in some bottom-feeder who’ll be happy to ’steal’ your house.”

“Now, there’s nothing wrong with this approach. It will definitely sell your house, but it’s an expensive way to go about it.” This is when I generally pause for effect. Then I say, “But what I’d do if I were you is use another approach, or what I call ‘The Traffic Approach.’ If it were my house, we’d raise the price about 10%, to $105,000! And then we’d set aside about 2% to use as a ‘bribe.’ In other words, I’d raise the price 10% and the commission 2%. But let me explain. If we were to look in the MLS right now, you’d find about 300 or so homes with more or less the same size, features, etc., as your house. Now, when an agent has a buyer customer who’s looking for that type of house, he’s not going to show all 300 of them. Instead, to keep his broker happy, he’ll probably show the client any homes listed by his company that happen to meet the criteria, but after that he’ll probably choose to show only a few others.”

“What this strategy will do is ensure that your home gets put on the show list. That’s all it’ll do� but it’s enough. Here’s why. I don’t know of any agent who’d try to talk his customer into buying a house that wasn’t right for him, simply to make a higher commission. But, on the other hand, I don’t know of any agent who wouldn’t hope for his client to choose the home that paid the best. Agents are just regular people, and if they can make more money doing the same amount of work representing their clients, you can bet they will.”

“Do you remember Field of Dreams? The famous line from that movie was, ‘If you build it, they will come.’ Well, in real estate, if you bribe them, they will come! The fact is that, in order for your home to stand out in a sea of other homes for sale, there must be something ‘outstanding’ about it. With the traditional approach, it’s the price (if not immediately, then eventually) that makes the house stand out. But with the traffic approach, it’s the abnormally high commission. It’s really very simple.”

Then I’d tell the seller that I’m equally comfortable using either approach (which I am), but I’d be less than honest if I claimed that the two methods had similar results. The fact is that, while using the traffic approach, we have historically sold our clients’ homes in about half the time and netted them more money in the process!

Real-Life Examples

Finally, I’d tell the seller of some cases where I’ve used the traffic approach and had great results. Remember: Jesus taught in parables. Why? Because people love stories. A story can take the vaguest idea and make it imaginable by making it real. Here are a few of my favorite stories that I’ve used countless times in the past.

Through my website, a client who was a licensed broker in Boone, North Carolina, approached me one day last year. His parents had passed away, and because of his real estate experience, his siblings had chosen him to help sell the family home. So he called the largest company in our market, which happened to be Coldwell Banker, and listed the home for $64,900. Over the course of two years, Coldwell systematically reduced the price to $59,900. But even though it was a very nice little house, the seller hadn’t received a single offer on it during the course of the listing contracts.

When I explained my idea to the broker, I could see the lights come on in his mind! As an agent, he intuitively knew that this approach would work, so at my suggestion we raised the price to $70,000 and the commission from 6% to 8%. (The co-op was half.) Well, within a month we had received three offers! The first two we turned down, but the third was a full offer, and we accepted it. Still, we had one more hurdle to get past: the appraisal had to support the sale price. As it turned out, the appraisal came in short, and my client had to sell the home for $69,500 and do some minor repairs that amounted to less than $600 (and probably would’ve had to be done with any sale at any price).

So after raising the price $10,100 and then paying an extra $1390 (the 2% extra commission), my client netted $8210 more money and got the absolute top dollar for his childhood home. Even more importantly, we accomplished in under ninety days what he’d failed to do in two full years: we got offers and were able to command the maximum price because of the traffic generated by the higher commission. Was he happy? He was ecstatic! And so was I.

Here’s another story you’ll love. Again, I had a client approach me through my website. (Are you noticing a trend here?) This fellow was very frustrated because he’d bought a brand new home, closed on it, and was having to make two mortgage payments every month. He’d tried to sell the home FSBO; and although he’d shown it a lot, no offers had materialized. Then he listed it with a local brokerage, but the home received no offers and had very few showings. After the listing expired, I went to see him and showed him my approach, and he decided to try it. We raised the price from $79,900 to $86,000, immediately had a surge of showing traffic, and, in exactly seven days, sold the home for the full price of $86,000. As in the previous story, we then anxiously waited for the appraisal, but this time it went through without a hitch. To this day, my client thinks that I’m a genius and sends me business every chance he gets.

So let’s do the math on this one: the additional commission cost him $1720, the additional price he was able to command was $6100, and his net benefit was $4380, or over 5% more money! Best of all, the house sold almost immediately!

I could go on and on with these stories, but I’ll share just one more. This client was one of those know-it-all people. I approached him with both options, as I always do. His initial reaction was that he’d never heard of the traffic approach and was skeptical because he had a problem with the high commission. So we initially listed the home at 7% (let me remind you that we’re in a 6%-or-less market), and we waited. We had a slightly-better-than-average number of showings, but nothing outstanding and no offers for about four months. Eventually, though, the client began to get frustrated (not a new thing to many of you listing agents, I’m sure) and called me to ask what I thought he should do. He was in a hurry to sell the home and had a lot of equity, so he’d listed it for $146,000. I asked him if he remembered what I’d suggested when he first listed the house, and he said, “Not really.”

Then I suggested that we raise the price to $156,000 and the commission to 8%. He’d been considering reducing the price and was naturally stunned when I told him to raise it. Well, we closed not long afterward! He was very thankful for my getting him top dollar, and I can promise you that he’ll never sell another home the same old way. Quickly looking at the math, you can see that we raised the commission 1%, or $1560, and we commanded $10,000 more for the home and sold it almost immediately.

Now, did I do anything differently in any of those cases? Absolutely not! I advertise all of my listings exactly the same ways and show no preferential treatment, regardless of price, commission rate, or pressure from the client. What sold those homes and many more just like them was the commission.

But it gets even better! What’s the first thing we’re all taught to do when a home doesn’t sell? That’s right: lower the price. But what I generally do is convince my client to raise the commission. We’ve raised the commission as high as 12% (!) to sell a home that otherwise would’ve sat vacant forever. It’s amazing what a lot of showing traffic will do for even the worst dog of a house.

So there you have the listing presentation that’s made me one of the top listing agents in the country and earned my clients and me lots of money. And now that you have the “ammo,” in my next article I’m going to give you the “gun.” In order for you to be a top listing agent (or buyer’s agent, for that matter), there’s one thing you simply must have: an unending supply of new customers. In my next article I’m going to share with you the technology I use to generate as many as seven listing leads every single day - and between fifty and seventy new buyer customers! The next article is one you won’t want to miss.