Tearing out your hair with a property that won’t lease? Freaking out at the days on market creeping up?
Having trouble convincing an owner to reduce their prices? You are not alone.
Many of our clients around the country are experiencing some tougher times in leasing, and are frustrated by getting their owners to reduce their rents to meet market conditions.
If the property is in good condition, marketed correctly, and available to be shown, as agents we usually know it’s the price that needs to shift. Price adjustments typically aren't easy and often you will feel like you’re fighting against your owner at this stage of the property management process (despite the fact that effectively you are both on the same team, both wanting to get the best possible rent in the least amount of time).
The important word to note here is “possible”. Securing the best possible rent doesn't always mean the highest rent the property has ever received. What this means is securing the best possible rent for that particular point in time, given market conditions, tenant options and situation.
The first problem is that often landlords have an assumption that the rent should continually be going upwards. There is a lack of education to these clients surrounding the time of year, market conditions, recent data, and a realistic comparison of their property to others on the market.
The second issue is that because the rental market moves so quickly, the price from a few weeks ago may not be accurate today – but we aren't educating them along the way so that they know this, we assume they know what we know, and it’s usually weeks into marketing the property before we start to speak to the owner about reducing the price to meet market conditions.
In markets like this, it’s often not enough to rely on your normal renting tactics – list property online, take enquiry, show apartment, receive application, hey presto – apartment rented!
You may need to use a few proactive tactics to communicate smarter with the owner to ensure you can get faster results:
1. Use your data
There is a plethora of data available to you in the property management world that is underutilised at all stages of the leasing process. Days on market, vacancy rates, registered tenants, properties leased by your agent, properties leased by other agents, number of comparable properties currently on the market, properties leased by agency each week, applications, enquiries, property visits. Data doesn't lie and can be used to paint an effective picture to your client from the get go. Sharing this data means they can go on the journey with you and be more prepared to agree on price adjustments. Most of us have access to this information, but it’s how you use it that will make a difference.
2. Know your numbers
Know exactly what it will cost the owner to wait one more week for a tenancy. Being able to explain the cost of having no rent coming in versus dropping a few dollars a week over the course of a six or 12-month tenancy may help them see how important it is to get a tenant in rather than wait for the top dollar in rent – how you can help maximise their return. If you want to take a harsher approach, one of my favourite pieces of dialogue surrounding this comes from Andrew Reece of Inspect Real Estate: “Mr Landlord – your property is currently rented for $0 per week..” That should get them thinking...
3. Preframe your review dates
In relationships we all hate to hear the words “we need to talk”. And the same negative emotion can surround the discussion with the owner around “we need to reduce the price”, especially framed weeks into the marketing campaign. Explain to the owner from the initial stages of leasing that you conduct regular reviews of the market and will be recommending price adjustments along the way to ensure we achieve the best possible rent for you in this market in the least amount of time. Using the word 'adjustment', rather than 'reduction', should help your cause too.
These are some points you can use to improve your process surrounding price adjustments to get a faster result, but there are many more great ways to think outside of the box to get your properties leased faster.
We have a handy checklist guide to give away to you this week – click here to get your free copy of the “It Won’t Lease Checklist” and good luck!