I want to talk today a little bit about something that’s really near and dear to Seller’s hearts and that is probably the most important decision they’re going to make when they put their house on the market. Pricing. It’s a sensitive subject to Sellers! They’re made a home that reflects them personally, where they live, entertain, and have holidays. They’re attached to their home. Realtors® are analyzing the market statistics that include the homes in the area closest to the home to see what they’ve sold for within the past 90-180 days. We then create “comps” using an MLS program that averages the price, sp fq, days on market, etc. It’s usually very reliable. Pricing a home when you’re using a Realtor® should be a partnership.
There are three different strategies for pricing. I’m going to go over them and give you the pros and cons.
The first one, and this actually happens quite a bit, is when the Sellers want to go on the market priced higher than the comps. Significantly higher. Often the rationale for that is, “Okay, we’re going to start here and we’ll negotiate down to this price it will sell for. That can happen, but it presents problems. You only have one chance to be introduced. This house is like a date. And when you go on a date, you have one chance to make a great impression! When a listing is first put on the market, it draws a lot of attention. On all the services that list homes, it comes up as new. So people that are looking will see it right away and if they’re interested, they will set a showing. Consequently, the first week to ten days will tell us remarkably well whether a house is going to take a while to sell, or whether it’s going to sell quickly . . . .because we see how many feet go through it during that period of time and how many offers we get. Also, people look by price. If you price over what the data tells us, you’re missing the very people who wil likely buy it. People who overprice usually ride the wave downward, revising the listing until it hits the sweet spot where it sells. A lot of time is lost ,along with Buyers who moved on.
Number two is pricing it exactly where the comps show it should sell. This will depend on your Realtor® pulling fair comparisons. I try to stay in the same subdivision, and most times I know the nuances of things like ‘houses between x street and y street sell for more than beyond that x point, so I adjust for that. This pricing tactic is as good as the search and results of the CMA. If the property is in good condition and can compete with other homes for sale nearby, it should sell.
Number three is a strategy that a lot of people don’t think about, but it is remarkably effective. It is to get your house in the best condition possible, look at the comps and then market it slightly under what the comps say it will sell for. Not drastically, just a little bit. Consumers are online 24/7 when they’re looking to buy, so they know the norms of sales price in the areas they’re looking. If you go on market at a slightly lower number, you should get very high traffic, quickly, which is the name of the game. And in areas where there is high demand and an affordable price bracket, you’ll get several offers. Then the agent sends out the message “We have multiple offers. Send your highest and best offer by “x” pm and we will notify you by “x” tomorrow.” I’m working with a buyer right now who lost that bidding competition on one home and we just won our offer on the home he’s been waiting to buy!
Those are three strategies. They can all three work in different circumstances, each with downsides. #1 has the most downsides as you forfeit your opportunity to reach buyers who are looking to buy in a different price range, . #2 has very few downsides unless the market changes drastically and fast (think weather catastrophe). #3 has one downside – if we misjudged the market, you may sell it below the price the comps say it should sell. That should not happen if the days on market for sold homes is low and are selling at a price slightly higher than your list price.
I hope this information helps you in your process. if you are getting ready to sell your house, you give me a buzz. I’d love to help!