By Verl Workman
As professional sales people, we are often faced with serious competition and in a challenging market it seems more and more agents are willing to discount their price in order to secure a listing or buyer.
While each agent and brokerage is entitled to set their own pricing, I have found that in most cases where discounting of price occurs, it is not because of a discount price strategy; rather it’s an inability to show enough value to the client to get the price the agent would like.
I spent many years working state fairs and shows selling hot tubs and satellite dishes (yep, I was that guy!) I love that hard core sales environment where the best sales people make great money, and the poor sales people watch and wonder how they can be at the same event and suffer with dismal sales. The answer is very simple- the super stars of sales know how to sell value. I remember one year at the Utah State Fair, my Hot Tub booth was set up right next to the outdoor tents where all of the pitch people were. These pitch people sold everything from Salsa Makers, Ginsu Knives to the Swiffer. I loved to watch the pros work the crowds and see the hundreds of people walk away with their products. I know for a fact that all of those customers came to the fair and personally committed not to buy anything! But after seeing the pitch they could not resist.
Let’s look at how these sales people were able to sell so many products to mostly reluctant buyers:
Let’s take the Super Chamois; I learned several lessons from this great salesman. He always began his presentation by taking a nice piece of carpet that was light colored and set it in a tub; he then took a Dr. Pepper and dumped it all over the carpet. This first lesson was “pain” and all the audience members related to this painful experience of spilling something on their light colored carpet. Next he took out the Super Chamois, and blotted it on the carpet—and you could actually see the Dr. Pepper being absorbed up into the Chamois!
As he made this demonstration he talked about all of the uses for this amazing cloth in your car, boat, , kitchen, bath tub spills, etc. and he showed the different sizes of Chamois. With great enthusiasm he then created a package that included 2 of the large sizes and one of every other size and rolled them up into a nice bundle. This is where it got really interesting. He held up the bundle and gave the price of $19.99 (and I thought this was a great deal) but then with masterful precision he looked at the crowd and said “I have 25 bundles ready to go right now, and for everyone who gives me their credit card right now, I’ll throw in a 2nd bundle absolutely free!” It was like a feeding frenzy as people pushed to the front to give their cards to this great salesperson.
The lessons I learned that day were:
- Pain is a great motivator (spilled Dr. Pepper)
- Demonstrate the real product- show dramatically how it works (the solution to your problem)
- Close with enthusiasm and build a valuable package
- Create urgency by increasing the value of the package
This simple concept of adding value instead of decreasing price can be effectively applied to real estate. As an agent you have the ability to build a valuable marketing plan that increases your value. Some of the things we do is hire a professional photographer to shoot the home, we post the listing on dozens of sites where consumers are looking for homes, track all the traffic using Obeo’s back office, we stage every home with a professional designer to ensure buyers can see themselves living in the home and much, much more. When we demonstrate all of these things to our sellers, they are embarrassed to ask for a discount because there is so much value. In fact, at a listing appointment the other day I told the seller that I recommended that they pay an additional 1% above my standard commission rate so I could offer an incentive to any buyer’s agents who have buyers in the price range. After seeing the value I provided they agreed to the increased commission. Sales is not rocket science, it is the combination of understanding the pain or real problem of your client, then step by step creating a plan to solve this for their family. This is done by increasing your value, not by decreasing your price.
Bottom line: People make decisions based on what agent they feel can solve their problem. An agent who does not know how (or can’t sell themselves or their services) can only compete by discounting their price. This is never necessary. I personally choose to be a full service, full price agent, and this philosophy allows me to provide a higher level of service to my clients.
