A Word About Pricing

Pricing your home is both an art and a science.

Achieving the optimal price is the result of both objective research into comparable properties and a gut feeling about your property and the current market.

The right price should:

• Attract many buyers within your price range
• Allow you to net the most money possible
• Help you sell quickly for the best terms possible

“One last point about pricing a home effectively is that sellers and agents have no control over the market.”

The simple fact is, price is the number one factor that most homebuyers use to determine which homes they want to view. And it’s important to remember that, although the price is often dictated by you, the “value” of the home is determined by the buyer.

What really matters is how your home stacks up against the others currently offered for sale and certainly the recently sold comparables in your neighborhood. The buyers are more tech savvy than ever before and are very sensitive to suspected price gouging. They will be comparing.

Try to avoid allowing your enthusiasm/emotional ties to memories of the home to impact your better judgment – overpricing is a common mistake that can cost you in the end.

The Importance of Proper Pricing:

• Faster sale and less days on market – yes, even in a hot sellers market
• Exposure to more buyers in a realistic price range
• Increases Realtors® response
• Generates more advertising/sign calls
• Attracts higher offers
• Often means more money to you as a seller
• Avoids having too long of a shelf life
• Homes that linger on the market tend to be thought of as trouble

Common Reasons for Overpricing:

• Over-improvement
• Need the money (desperate circumstance)
• Purchasing in higher-priced area
• Original purchase price was too high
• Lack of factual data
• Allowing too much bargaining room
• Moving isn’t necessary
• Assessed value vs Online algorithm based assessment (often not realistic)
• Emotional attachment
• Opinion of the home from family and neighbors

Dangers of Overpricing:

Most of the activity on your home will occur in the first few weeks. Pricing a home properly and then creating immediate urgency in the minds of agents and buyers is critical.

Buyers who have seen most available homes in their price range are waiting for the “right house” to come on the market. That’s why if a house is priced right, it will sell quickly. The buyers are there waiting for it.

Don’t start with a high price and the assumption that you can reduce it later. By the time you decide to lower the price, it may be too late, as interest will have already slowed down.

“Time” is acid to the price of a home on the market. That’s one of my favorite quotes to describe how time of a home on the market relates to lower offers over time.

A major cause for concern is appraisal problems; overpricing can lead to loan rejections and lost time.

Even if your home is nicer than other homes in the same area, your house won’t be picked for viewing if you set the price too high.

Buyers and agents become aware of the long exposure period and often are hesitant to make an offer because they fear something is wrong with the property.

• Attracting the wrong buyers
• Fewer potentially qualified buyers will respond
• You might help sell similar homes that are priced lower
• You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs

The Role of a Real Estate Agent in Pricing:

Provide you with a comparative market analysis (CMA), a comparison of the prices of recently sold homes that are similar in terms of location, style, and amenities.

A CMA is performed by comparing previously sold homes in the area, and currently active homes to know your competition. There is no “exact price” for real estate. “we” won’t know beyond a doubt what your home is exactly “worth.”

The market determines value… but together, we determine the asking price.

We determine the price based on the factors we can control:

• Marketing time expectation
• Condition of the home overall
• Exposure method/presentation

One last point about pricing a home effectively is that sellers and agents have no control over the market.

Only regarding the manner in which a home is presented to the market and the experience we provide to any available buyers.

That’s why you should never select an agent solely based on a price point number they give.

One of the oldest tricks in the book is to tell a seller they can receive far more than what you feel might be realistic and while the agent then makes plans for future price reductions, you are left to hold the financial end of things.

Being honest and realistic from the beginning, providing eye catching promotion and professional networking will still play to your favor.