Are you priced to sell? Price it right up front!

The market is extremely sensitive to price. The simple truth is, in the hands of a skilled negotiator, with massive impact marketing techniques, a well-priced property will attract more offers and sell quickly for top dollar! A recent example was my listing at 4564 Duart Rd which had been previously listed for 119 days by another Realtor for $1,250,000 and expired without selling. Our team listed it for $1,199,000. We launched a successful marketing campaign and it sold it in just 4 days, with five competing bids, for $1,300,000.

 There are exceptions and variables that result in outcomes which cannot be readily predicted or computed with logic. For example, the Grandparents who can afford to pay far above “market  value” to live next door to their grandchildren. Aside from lottery like luck and the speculation of market values rising, the reality in my experience is clear that even in these cases, if the Buyer was put into a position to compete, they’d be likely to pay more than if they were the only Buyer trying to negotiate the purchase.

 Today’s age of "instant access to information," has Buyers waiting in the wings for new listing information. Typically an immediate judgment is made upon seeing new listing information by Buyers and their Agents ranging from, “Wow this seems like a good one, how soon can we get in?” or “This looks overpriced!”

The difference in psychology is massive between the Buyer who finds a property they’re afraid to lose, versus a property that seems interesting, but overpriced.

New listings typically get lots of attention, however the Seller is less likely to be flexible to negotiate on the price. A valuable tip Buyers should consider is rather than focusing on new listings that just hit the market, instead focus on the Seller who’s home has been listed for 190 days and has been progressively adjusting his price down. Over time, a Seller typically becomes more open to being flexible with the price!

 In the market today demand outpaces supply in many regions of the country. Pricing a house is probably the biggest challenge Real Estate Professionals face. Sellers typically want to price their home higher than is recommended and is in their best interest. Often Agents go along with the wrong price to get the listing, secretly hoping to bring it down later. The best Agents are committed to what is in the best interests of the Seller and are prepared to tell the homeowner the truth up front, running the risk of not getting the listing.

There is no “later.”

Many Sellers believe, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes

John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a Seller who priced high at the beginning and then lowered the price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:

“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 it's 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 can naturally 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.

Information about price changes during a home's marketing period is typically missing from data used to investigate the listing price, selling price, and selling time relationship. This paper incorporates price revision information into the study of this relationship. Using a maximum-likelihood prohibit model, we examine the determinants of list price changes and find evidence consistent with the theory of pricing behavior under demand uncertainty. Homes most likely to undergo list price changes are those with high initial markups and vacant homes, while homes with unusual features are the least likely to experience a price revision. We also explore the impact of missing price change information on estimating a representative model of house price and market time. Our results suggest that mispricing the home in the initial listing is costly to the Seller in both time and money. Homes with large percentage changes in list price take longer to sell and ultimately sell at lower prices. Copyright 2002 by the American Real Estate and Urban Economics Association.

Don’t build “negotiation room” into the price.

Many Sellers say that 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 dampen the enthusiasm of those who see it. 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 (as they are doing more and more often), 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 know your listing is available, let alone come see it!

A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these Buyers to compete against each other for the “right” to purchase your house.

Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective Buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

The Price is Right

Typically homeowners have an idea of value for their home that exceeds actual market value. In fact, of the many thousands I’ve met over the years, there have only been about a dozen who I’ve had to convince their properties were worth more than they thought!  There are a number of contributing factors to this. Most significant of which may simply be the lack of information readily available about how much properties have actually SOLD for and much exposure to asking prices. The worst part of that is that we see much more of those that are most overpriced as they are around longer and exposed more while the well-priced listings often sell with no apparent advertising at all!

Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an Realtor that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an Agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position in the market.

Click here to view a recent example of an “underpriced house” that set a new price record

A few more points on pricing from Ron with RE/MAX

Attracting Buyers is the name of the game. As a Seller, you have two goals:

1. To get the most money possible
2. To sell as quickly as you can.

Be realistic. Price is the number one factor that most home buyers use in determining which homes to view. Although the price is set by you, the Seller, the value of the home is determined by the Buyer. Don't allow your enthusiasm to warp your judgment and lead to overpricing - a mistake you can't afford to make.

Here are some factors to consider to help you sell your home. This information is not all-inclusive and does not replace the value of a personal consultation.

What Affects Your Asking Price?

Look to Ron Neal and The Neal Estate Team with RE/MAX For The Truth and The Answers You Need!

As you can see, there are a multitude of factors that determine the asking price of your home. Finding this price can be a difficult task. That is why thousands of satisfied homeowners, like yourself, turn to experts. Ron Neal and The Neal Estate Team will tell you the truth, what you need to hear, not what we think you want to hear. We have the tools necessary to compute the fair market value of your house quickly and accurately while allowing for personal considerations (such as the date by which you must sell). Ron Neal & The Neal Estate Team with RE/MAX Alliance will also confidently answer your questions about listing, pricing and showing.

Our goals are the same as yours:

1. To get you the most money possible;
2. To sell your home as quickly as you can;
3. To make selling your home a pleasant and profitable experience for you.

When You Want to Price Your Home to SELL FAST for TOP DOLLAR

Count on Ron Neal & The Neal Estate Team of RE/MAX Alliance

www.VictoriaHouseValues.com