One of the most important elements to the home selling process is the pricing strategy. Pricing is part of the overall home marketing strategy. Pricing is also the main determinant of perceived value.
Buyers in today’s market have access to more data than ever before. This access to data has increased the buyer savviness. Buyers recognize value, but also over-priced listings. All of this access to data means pricing your home correctly is more important that ever. I like to list homes at the price at which I believe it will sell. A $900,000 home should be listed at $900,000, and no higher than $909,000. Since buyers will recognize whether a price is fair there is no sense in trying to fool them. Pricing a home accurately shows buyers that the seller is reasonable, and therefore willing to work with other reasonable parties. A correct asking price will attract the most amount of qualified buyers, and create a sense of urgency with those buyers. When buyers know a home is priced correctly they realize the home will sell quickly, and it makes them act quickly.
Many sellers tell me, “We are not in a hurry to sell.” They also say, “We can always negotiate.” What they’re really saying is that they want the best price possible. Pricing a home at a higher than market price does not ensure the highest sales price possible. Overpricing a home actually reduces buyer activity and interest. It prolongs market time as well. The longer a home sits on the market, the less likely a seller is to get a fair market price. When a seller lists their home for sale they should want it to sell within a matter of weeks. Homes that sit on the market appear to buyers as overpriced, and therefore not a fair value. Few buyers will come see an over-priced listing, and sellers are left with no offers to negotiate.
Underpricing a home does not mean your home can’t sell for top dollar. However, it will create an unnecessary feeding frenzy and attract unqualified buyers. There is no sense in offering a $900,000 for $800,000. You don’t need 30 offers to sell a home. Five to six is an ideal number. Interestingly enough, pricing this $900,000 home at $899,000 or $889,000 can lead to a bidding war, and attract offers higher than asking price. When buyers know others will be interested they compete, through offer price, for the listing.
When buyers compete for a listing a seller is more likely to get a higher price, and control the terms. Recently our sellers have been offered the following: Cash offers $90,000 over asking price, free rent-backs for up to a month, and “as-is” sales with no repairs. These offers all came in when buyers knew they needed to complete the listing. Buyers submitted amazing offers because we priced our listings accurately.
When listing a home for sale be sure to look at the numbers. List your home at the correct price, increase the interest and quantity of offers, and make selling your home an enjoyable experience!