The single most important decision you the seller and I will make together is assigning the most effective list price for your property. What does that mean? An effective list price is one that is not too low and not too high, as compared to similar properties that have recently sold in the area, but one that will attract as many buyers as possible to your home. If the list price is too low, and multiple bids don’t materialize or if they don’t drive the price to its market value then you may leave money on the table.
On the other hand, if the price is too high it can discourage buyers from making an offer. The most effective list price will encourage buyers to put an offer on your house because they are convinced it represents good value. Different properties require different pricing strategies. There are circumstances when a pricing strategy that works with one property would not be good for others. For example:
- If a house is very unique it may take longer to sell. Therefore under pricing this type of property expecting to get multiple buyer interest immediately may not be realistic and compromise the final sale price.
- Pricing strategies for multimillion dollar homes take into account that there are less buyers in that price category so they may not get multiple buyer interest immediately. In this case the asking price has to be carefully assigned.
Furthermore, if you set an offer date on such a house and no offers are forthcoming, you will have compromised your objective to get the highest price possible and it could cost you tens or even hundreds of thousands of dollars.
Assigning the most effective list price is an art I have mastered through many years of experience. So how do I do this?
- I carefully analyze properties currently for sale in your area. Your competition does not determine market value because these houses may be priced too high or too low. But it provides insight as to how a buyer will perceive the asking price of your property when comparison shopping. If the competition is priced below your list price, buyers will perceive your house as priced too high. Conversely, if the competition is priced higher than your list price, buyers will perceive your house as attractively priced. So the first step is to consider how the competition will affect the value of your property when it’s exposed to the market and adjust the marketing plan to reflect this.
- I analyze similar properties that have sold in your area and suggest the most effective list price based on how your house compares to these sold properties. When doing this I consider whether these houses sold under optimal marketing techniques or was the marketing handled in such a way that they sold considerably below or considerably above their list price. It’s obvious why I would not use a property that sold well below the list price but why would I not if it sold well above?Example: A property listed for $799,000 sold for an over inflated price of $1,100,000 under intense competition. If the bank issuing the mortgage does not appraise this property for $1,100,000, the buyer will have to come up with a higher down payment to get the mortgage or they will not be able to close on the property with obvious dire consequences to the seller. Consequently, the sold properties I use as comparable to suggest a list price will not be extreme on the upside or downside.
- I advise you to price your property in such a way to allow the buyer to see all the positives of your house instead of focusing on the negatives. If your house is priced too high the buyer will fixate on what your house doesn’t offer rather than what it does.
- I advise you set an asking price that will reflect current market psychology (unless your house is unique in nature as discussed previously). If the average time to sell a house is a few weeks and your house is priced so high that it lingers on the market then it will become stale and the ultimate sale price will be compromised.
- I advise you to price correctly from the beginning so you don’t have to reduce the price at a later date. When your property comes on the market it will generate a flurry of activity. If serious buyers perceive your property to be well priced they will make an offer, if not they will move on. The critical period when buyers make the decision to offer on your property is the first few weeks on the market.
- I advise you to price the property to create a buzz with other real estate agents. We want agents to show your property with the intention to sell it, not to use it to compare to another property they intend to sell to their buyer which they believe is better priced.