How Debbie DeGrote sets price reductions at 5% or 10% after a three-week check-in

Debbie DeGrote00:00

Being careful how you handle that pricing conversation. So the number one reason listings are lost, it’s how that conversation is handled. But I’m your partner. I want this to succeed because I’m gonna earn more.

Loida Velasquez00:21

What’s going on everyone? Welcome back to the Vulcan7 Podcast, where we bring you some of the best in the industry to share with you their tips and strategies so that you can implement them in your business immediately. Now, on today’s episode, we’re gonna be talking about a topic that perhaps you’ve been thinking about, you’re struggling on, and that is how to handle price reductions.

00:41Depending on the market that you’re in, perhaps your listing is sitting, it’s been on the market for a while, you don’t know what to do. So with that being said, I’m gonna go ahead and bring on today’s guest that will share with us some amazing strategies on how to have those conversations. So Debbie DeGrote, welcome.

Debbie DeGrote00:58

Oh, it’s so great to be here, and I love this topic because when I started my career in real estate at the age of 18, fixed rates went to 18%. So there were some very tough years. And in my career, I’ve lived through many tough cycles, as many of your listeners have as well. I had to get great at price reduction.

01:24So it’s a favorite, favorite topic. And by the way, I just created a new price reductions course, pricing and price reductions. And because I so appreciate Vulcan7 and the opportunity, it is a course we sell, but you know what? I’m more than happy to give it to your guests for free, no strings attached.

01:50It’s, I think, eight or nine modules. It will do far more than we can do today. But if they’d like to email me, debbie@forwardcoaching.com, just say, “complimentary price reduction course,” we will get them all set up.

Loida Velasquez02:07

Awesome. Thank you so much for that. I’m sure that everyone, after they watch the next couple minutes, they’re gonna be reaching out, and we’ll make sure to also include your information in the description box below.

02:18But before we quickly get into the topic, for anyone that’s watching and listening and is maybe not too familiar with you, can you just give a little bit about your background and just kinda what you’ve been up to?

Debbie DeGrote02:30

Sure. Yep, and I’m gonna make it quick so we can spend our time on the good stuff.

02:34As I said, started selling at the age of 16, sold real estate for 16 years, sold over 3,000 homes personally. So I worked a lot and sold a lot and developed, in that time, a love for coaching. People would come to me and say, “I wanna do what you’re doing. How do you do it?” And that turned into a new passion, and for the last, ooh, 24 years or so, I always say I’ve had the pleasure and the honor of coaching some of the brightest and best across the country.

03:08I ran, for years, the Mike Ferry organization, the coaching department there. Launched my own about 15 years ago, really focusing on custom coaching. So I love to look at the person, the personality, their market, the right coach match for them, because I feel like there’s so much of the cookie cutter, one size fits all out there.

03:33And it can work, it just doesn’t work as well as when it’s customized. So that’s what we love to do here.

Loida Velasquez03:40

Awesome. Awesome. Well, thank you for telling us a little bit about that. Now, obviously, I wanna get right into the topic, handling price reductions. This is a topic that I feel a lot of agents struggle with, having tougher conversations with their clients.

03:54Because obviously when we put a home on the market, we want to get activity, we wanna get offers, but sometimes it doesn’t happen. Right now I’ve been hearing agents say, “Hey, you know what? It’s a seller’s market here.” In other places, it’s crickets. “We’re not getting any type of activity.” So at what point do agents need to really consider whether or not they have to have that conversation about pricing

04:18and talking with the homeowner?

Debbie DeGrote04:21

Great topic, and I’m gonna make it quick, guys, because I know we have just a few minutes, but I’m gonna lay out the steps for you. And I think step one is you really need to be a market expert, right? Because to your point, it’s not the same, not just in every city or state, but even inside of your community.

04:45There will be pockets and price points that will be different. Because I talk to hundreds of agents across the country every month, it is more likely that you’re in a market where you’re seeing 30, 45, even 90 days on market. If it’s luxury, it might even be climbing a little bit beyond that. So there’s actually fewer pockets that are not affected.

05:15We’re gonna see more price reductions needed. But if you can really know your market, that allows you to have a data-driven conversation with your seller, right? And there’s some great tools out there. You guys may be able to connect them to a few, but things like Area Pro is one that a lot of our clients use.

05:36It’s super, super affordable, and they can plug in an address, it gives them all the data, days on market, absorption rate, and it even will ChatGPT a script for how you can go and explain that to your client. So I think market knowledge. Number two would be being careful how you handle that pricing conversation, because while we need to be honest and clear, the sellers, they do like to shoot the messenger.

06:09So the number one reason listings are lost, it’s how that conversation is handled, right? And the market is a little unpredictable right now, so it’s not that easy to go in and say, “This is exactly the price.” Instead, go in and share the data. And in fact, we ask our coaching clients not to call it the comps.

06:37And the reason I say that is, if you all think about it, when was the last time you said to a seller, “Your home comps to the neighbor,” and the seller agreed? They never agree, right? They say, “No, no, no, my house is better.” Right? I mean, wouldn’t you, right? It’s sort of like saying your children are comparable to the neighbor’s kids.

07:01So instead, just say, “This is the data the buyer will be reviewing when they make a decision to buy your home.” Now, probably you will have to take some right now that you might feel are a little higher than you would like them to be, and I think the first step in the reduction is to set a game plan with that seller.

07:29And remember, they don’t wanna hear you say you’ll try it, right? Because that makes them feel you’re gonna throw it out there and then come back for a reduction. I like to say instead, “You know, we need to test the market. We are pushing the ceiling on price. We’re going fairly high, but I’m your partner.

07:55I want this to succeed because I’m gonna earn more if you do. You’re gonna love me. You’re gonna use me for life. You’re gonna refer me to your friends. I am going to fight for you. As your business partner, though, I respect you enough to always tell you the truth, and within two to three weeks, we’re gonna really need to examine what has been the feedback, the reaction, the activity, and we may need to make some tough decisions if the market is not responding.”

08:32So I wanna be sure that they understand I am on their side, I am their advocate, and I wanna ask their permission to always be direct with them. And then I wanna go ahead and calendar it in advance, and I would suggest for all of you not more than three weeks, right? Because we don’t wanna let those days on market rack up.

08:56If it is a luxury property, potentially you might give it a bit longer, but I really like to schedule that conversation at the three-week marker.

Loida Velasquez09:08

Awesome. And I’m glad that you just said that, because I was about to ask about the typical timeframe. Another question that I wanna ask you, because agents have brought this up to me and I want you to clear it up, is, “Debbie, the home has been on the market for 35 days, no activity.

09:26Should I withdraw it and get new pictures and put it back on the market at a different price, or what should I do?”

Debbie DeGrote09:33

Yeah. In some of the different boards of realtors around the country, they have rules around, like, can you withdraw it and put it back, or how many days does it have to be off? So you would all wanna check that in your local board and see if that makes sense.

09:50It is definitely a strategy that I used to use in the past, because in most MLSs, they’re still gonna be able to see the history, right? They’re still gonna know that that property was on the market previously. But it might catch the attention of a buyer or an agent if it pops back up as a new listing.

10:17Some may not go to that archive and see that it was on the market previously. But even if they do, it may just catch their attention, and that’s what we’re looking for, right? To grab their attention. So if it’s possible, if it makes sense, if it’s allowed in your MLS, it could be a good strategy.

10:38Whether it changes the world or not, sometimes some of the things we do are proactive things that are visible to the seller that make that seller happy. Because if the seller is happy that you’re being proactive, then they realize they’ve done all they can do. Now clearly I know we gotta make a decision on price, but if they feel the agent has not taken strong action, they’re always gonna use that as their excuse.

11:13“Well, it’s not the price, it’s the agent.”

Loida Velasquez11:17

Yes. Yes. And another question is, if we do a price reduction, is there a typical amount that we should reduce it to? What would you say?

Debbie DeGrote11:29

Yes, and I’ve heard so many people over the years trying to convince me that, “Hey, it’s a great idea to do a $1,000 reduction and then another $1,000 reduction.”

11:41In my experience, which is pretty massive, and because I feel like I have personally coached over 100,000 coaching sessions with some of the best agents in the country, we just don’t think that works, right? Because each seller, they have just a small tolerance for these reductions, and it’s like picking at them.

12:04Pick, pick, pick, and they lose their mind. Because any seller maybe will give you one or two. You might be lucky to get three, and then they’re gonna fire you, possibly, right?

12:16So there was an article, this is many, many years ago, you probably won’t be able to find it. It was just so helpful to me, though, because it was a NAR article and it said, “If a property is just dead in the water, no action, no activity, you can assume statistically it’s at least 10% too high.

12:41If it’s having some activity and no offers, you can assume statistically it’s at least 5% too high.” Now, the reason that’s helpful: sometimes there’s just no data. Like you can’t figure it out. There’s not enough sales to measure against, or maybe the market has shifted in a way that the previous sales, those numbers are too high.

13:10So by having that conversation with your seller and saying, “You know, the fact that we’ve had some showings, no offers in the three weeks, odds are we are 5% too high. I would recommend today a 5% adjustment. Are you willing to allow me to put that into action for you?” So a good rule of thumb is ask for five, don’t take less than three.

13:38Or if it’s dead in the water, ask for 10, don’t take less than 7%. Now, sometimes they’re gonna push back and say, “No, no, no. I don’t wanna do it. That’s too much. How about if we do 2%?” “Well, I really appreciate that you’re willing to cooperate with me. However, I feel you’ll just be frustrated. It’s not enough.

14:08Why don’t we do this? Why don’t you take a couple of days and think about it? Then I’m gonna call you back, and I’m gonna ask you to do the right thing, and let’s adjust it by at least 3%. But take your time. Think about it for a few days.” Because sometimes they need to just stew on it a minute, and then you circle back and ask them again.

Loida Velasquez14:32

Awesome. I love it. Everything that you’re mentioning, I think agents will need to re-watch this episode, because what you’re saying and how you’re saying it is exactly what they need to have these conversations. Now, as we wrap up, obviously, you have mentioned that you have this course, which

14:46we’ll make sure for agents to reach out to you. But tell us a little bit more about your coaching and how agents can get ahold of you if they would like to just learn more.

Debbie DeGrote14:55

Sure. So again, for the course… Actually, either way, if you have an interest in having a conversation with me about how our coaching works, just feel free to email me direct, and that’s Debbie, and you can hopefully see on the screen, D-E-B-B-I-E @forwardcoaching.com, and say, “Complimentary strategy call.”

15:19So the way that we discuss coaching with people here, there is no hard sell. There is actually no contract. We don’t even ask our clients to sign a contract. If you have an interest in finding out more, you will actually speak personally with me, where I’ll do a deep dive and understand your business.

15:41We’ll talk about the gaps, areas for improvement. I’ll make some recommendations, and at the end of that meeting, if it feels right, then we can always take the next step. So first step is easy. No pressure. Complimentary strategy conversation with me. You can also use that email, debbie@forwardcoaching.com, and say, “Complimentary price reduction, pricing and price reduction course.”

16:10Now, the good news about the course: it is an on-demand course on an easy-to-utilize platform. So once we turn it on for you, you can go through there at your own speed, whatever time of the day or night you choose. So that will be very easy and hopefully very, very helpful.

Loida Velasquez16:32

Perfect. Well, Debbie, thank you so much once again for hopping on the Vulcan7 Podcast and sharing all this great knowledge.

16:39We’ll make sure to put all of your information in the description box below. And with that being said, everyone, we’ll see you on the next one. Bye.

Debbie DeGrote16:45

Thanks so much, and thank you. Bye-bye.