The Importance Of Pricing Your Home Right...The First Time!

As a REALTOR® pricing is the key to everything, whether we're helping to buy or sell a home, it all comes down to what our opinions of value are. We can do our research for what homes have sold for in the recent past, we can factor in current trends or specific issues that can affect the value, but this is sometimes just a starting's often more art than science & even in today's Sellers market, it's still the Buyers who determine the value! 

If your home ends up in multiple offers then you know you've got something special, whether it's features or location or just simply a case of supply & demand...whatever it is, Congrats!  But it's not these homes I want to talk's when your home isn't getting showings & not getting offers within that all-important first couple of weeks on the market that you need to look at where things went wrong!

As I mentioned above, pricing is the key to everything. My Broker always says "Do you want to be ON the market or IN the market?" In most cases pricing can account for the condition of a home (think: dirty, out-dated or poorly maintained), an undesirable location or a stigmatized property (think: crime or environmental) If a home is priced according to both its features & its shortcomings then you're golden...and if not, WHY wasn't it?

Dazzled By The Dollars

Agents Over-Pricing
An agent throwing out a high, unrealistic & often unattainable price is called "buying the listing" in our industry. The thinking behind this is to get the listing by distracting the Sellers with dollar signs & then keep asking for price reductions until it sells.  It can also happen when you've got an inexperienced agent or simply be a mistake. Because, yes, sometimes, even the best agents make mistakes! 

When an experienced agent uses this strategy deliberately to "win" listings, the only one "winning" is them. I say winning because they're going to get paid regardless of what the Seller nets from the sale. If the true value is far less than what was promised then the Seller certainly isn't winning, because they're not ever going to realize that extra money. 

As part of our fiduciary duties when we enter into a client relationship with a Seller, everything is supposed to be done in the best interests of that Seller client.  Over-pricing can mean that the home takes longer to sell, or sells for less than it should have and sometimes it doesn't sell at all....Clearly, over-pricing a home is not in our clients' best interests! I also think it's damaging to our industry as a whole, after all WE are supposed to be the experts, right?

I was involved in a situation like this earlier this year....but with a happy ending. I was up against another REALTOR® for a new listing & they suggested a much higher listing price than I did. I was lucky in that I got the opportunity to go back to the Sellers & show them that no matter how much I analyzed the data, that I could not even get close to the other agent's number. I'm pleased to report that I sold the property within the range I had suggested, and with enough time on the market that we all felt comfortable about the final selling price.

On the other hand, I've also been the REALTOR® who suggested the higher list price...but only when I've had the stats to back it up! I've got a handy-dandy chart that shows that my listings this year have sold for more than their competition during the same time-frame... I'm quite proud of my record & I include it as part of my listing presentation :)

#ProTip...When you're interviewing agents get them to explain the rationale around their suggested listing price, and make sure it makes sense!

Sellers Over-Pricing
This is a tough one! While we can offer our professional opinions on value, the client (homeowner) has the final say on what the listing price will be. Sometimes that price is what they NEED to sell it for rather than what it's actually worth. When these 2 figures don't match up then it ends up wasting everybody's time...Buyers who want to purchase the property (at a fair market price), the listing agent who spends a whole bunch of money preparing & marketing the property & finally the Seller themselves because having your home on the market is very disruptive to your regular life & you run the risk of not getting the property sold at all!

I tried to help some clients buy one such home this summer, sadly for them it did not work out! The home was over-priced by at least $15k to start with & it came out in negotiations that the Sellers' bottom line was completely unrealistic (it seemed to come as a big surprise to the listing agent as well!) & the home just sat & sat until it was taken off the market.

#ProTip...When you hire a professional, listen to them! That & get them to back up their analysis...if what you need & what it's worth are not the same then maybe it's not the right time to sell!

Know When To Hold'em (& When To Fold'em)

The flip side of this is that the price IS right & you have to know when to stay the course! I've been on the listing side of this scenario a few times & it can be nerve-wracking...but sometimes you just need to wait for your Buyer! It could be a timing issue or (frustratingly) for no apparent reason at all...if you've picked the right agent then rely on their expertise to guide you.

I've also been on the buying side, where I've known without the shadow of a doubt what a property SHOULD have sold for but multiple offers have skewed the in point: a home my Buyer clients were interested in sat on the market for waaaaay longer than it should have, given the market conditions & location, in my opinion because of the price. However, the Sellers held out & ended up with multiple offers that sold their home for the asking price (after 60+ days on the market)...multiple offers got them between $5-10k more than I recommended to my clients in a single offer scenario. The home was not worth that price to my clients so we watched that play out from the sidelines...Again, if you've picked the right agent then rely on their expertise to guide you.

And finally, sometimes you DO need to reduce...maybe your first offer ended up being your best offer but sadly it's long gone now (that's a bitter pill to swallow) or the market has changed or all the feedback you're getting is telling you you over-reached...

Regardless of why the property is over-priced, if it needs to be sold, there's a good chance you're going to be chasing the market just like the picture at the top shows! The old expression that you never get a 2nd chance to make a 1st impression is definitely true. Think it's a good idea to "try out" a higher price for a week or 2 because you can always reduce it? That's a big gamble with what's most likely your largest asset! I've seen homes that have ended up selling for less than I felt they should have because they didn't get it right the first time.

#ProTip...My "3 Ps" for maximizing the value of your home:

Preparation: spotlessly clean and staged to attract & appeal to your home's key demographic, create the buzz needed for a successful launch

Promotion: the right strategy for your circumstances & your particular home with great photography, targeted marketing & creative solutions, as needed

Presentation: execute the plan, maintain the standards set from start to finish & be available...whether it's for showings, offers or just questions

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