Selling Your Home? Price it Right!
In today’s real estate market, where demand is high and supply is low in many areas, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize helping the seller understand the importance of strategic pricing is paramount.
There is No “Later”
Some Sellers think, “If the home doesn’t sell for this price, I can always lower it later.” However, research shows homes that experience a listing price reduction sit on the market longer and ultimately sell for less than similar homes.
John Knight, in his article Listing Price, Time on Market and Ultimate Selling Price, published in Real Estate Economics, states:
“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”
Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers may think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.
Don’t Build “Negotiation Room” into the Price
Many sellers say they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.
Not sure about this? Think of it this way – when a buyer is looking for a home online, they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even see your home come up in their search results!
The chart below shows the impact of price on visibility. The higher you price your home over market value, the less potential buyers will actually see your home when searching.
A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces buyers to compete against each other for the “right” to purchase your house.
Think of it this way: if you only receive one offer, you are set up in an adversarial position with the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which do you think will result in a better selling situation?
Real Estate Bottom Line
Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Let’s get together to discuss what is happening in the housing market and how it applies to your home.
Leave a Reply