Pricing Your Home to Sell

On-Target Pricing Philosophy

Goal: To select a price that is right on target and generates offers.

Rules of Thumb:

If you are getting showings but no one is writing an offer, it generally means that you are in the range of four to six percent above market price.

If your number of showings is low and you're experiencing a lot of drive-ups but the buyers don't come in to see the home, then your home is between six and twelve percent overpriced.

If no showings are happening at all, then your house is likely priced twelve percent or more above what the market will bear for your property.

How will I know if my home is priced correctly?

Although I will do everything I can to sell your home quickly, at the best price, and with no hassles, the one thing I cannot control or change is the market.

Even though we know how valuable your home is, the value of your home from a selling standpoint will be determined solely by the buyers. Therefore, I have generated the following 'levels of seriousness' to help give you better knowledge of whether or not your home is priced correctly. And remember, even if it is priced correctly today, any fluctuation in the market needs to be monitored to make sure that your home is neither overpriced nor underpriced.

I will communicate with you throughout the time your home is on the market, to help you understand what is happening with the market so that you can make the decisions that will help you realize your real estate goals as quickly as possible.

"MAYBE THIS SELLER ISN'T SERIOUS" LEVEL

SYMPTOMS: No showings and no offers. The agents and potential buyers are not interested in even seeing your home because they believe they can buy more for their dollars elsewhere.

"IT'S OKAY BUT I THINK I'LL KEEP LOOKING" LEVEL

SYMPTOMS: Either ten to twelve showings and NO offers or just a few showings. The number of showings has slowed down since the first few weeks when the listing was initially placed on the market or the home has been on the market for four to six weeks with no offers. Potential buyers believe that they can still get more house for their dollar and are willing to keep looking.

"THIS IS IT!" LEVEL

SYMPTOMS: Showings, second showings, and offers in the first four to six weeks. Congratulations! We are at the level where you want to be; you have placed your house on the market at the right price. At this level, we should be able to hold within just a few percentage points from where the home is currently listed. Potential purchasers believe that your home is one of the nicest homes and best values on the market and that the price supports their belief that your house might be their next home! They are ready to buy!

The Impact of Overpricing Helps your competition sell their homes. Reduces sales-associate activity. Reduces advertising response. Sends interested buyers to other properties. Attracts the wrong prospects. Eliminates offers. Can cause appraisal problems. Extends market time.

It is a mistake to believe that you will get more for a property by asking more.

Most Common Reasons Sellers Want to Overprice Property

  • OVER-IMPROVEMENT - Seller has over-improved the property in relation to what the market feels are adequate improvements.
  • NEED - Owner's need for money (amount owed on the property, for example).
  • BUYING IN HIGHER-PRICED AREA - Cost of new home where seller is moving is higher.
  • ORIGINAL PURCHASE PRICE WAS TOO HIGH - Seller paid too much.
  • MOVE ISN'T NECESSARY - Seller doesn't have to move, so decides to play the market.
  • CORPORATE BUYOUT - Seller has a guaranteed buyout.
  • LACKING FACTUAL DATA - Seller has a need but has no access to current data on recent documented sales.
  • INCOMPETENT AGENT - Some agents will accept a listing at whatever price the seller puts on it, and then will plan on readjusting the price after obtaining the listing.
  • NEIGHBORS - Often neighbors who have sold their homes will lead the seller to believe that they got more for their properties than they actually did, which causes the seller to choose an artificially inflated price.
  • INFLATIONARY TIMES - The seller believes that prices should go up in kind with or ahead of the inflation rates because of economic factors.
  • RECESSIONARY TIMES - The seller does not acknowledge that prices tend to go down because of adverse economic conditions.
  • FEAR - Many sellers fear making a mistake in pricing that would lead to losing a significant portion of their equity.
  • LOSS OF PERSPECTIVE - The seller is not objective because they are too emotionally involved in the sale of the property.

Common Pricing Objections

Frequently heard from sellers, these objections don't have any real relationship with determining a property's value.

  • Another agent said it was worth more.
  • Our home is nicer than those houses.
  • People always offer less than the asking price.
  • We can always come down on our price.
  • We have to get that much out of our home.
  • My neighbor was able to get his price.
  • Let’s try it at my price for a month or so.
  • The buyers can always make an offer.
  • We paid more than that for our home.

By the time an overpriced property is reduced to market value, it has been on the market too long for buyers to offer full price.

When your property is priced correctly to begin with, you have the best opportunity to get the highest price and multiple offers.

PRINCIPLES OF EVALUATION

COST
The amount actually paid for a property plus any capital improvements.

PRICE
The stated amount an owner is willing to accept.

VALUE
The amount a buyer is willing to pay under certain circumstances.

MARKET VALUE
The amount that will bring a sale, based on history of similar properties recently sold.

REGRESSION AND PROGRESSION
The affect that surrounding homes have on property values.

SUBSTITUTION
The actual value of an amenity. Value is determined not by cost invested but by the value derived from it.

Price it right the first time and get on which your life!!