Many wonder how to price their home in our current market.With the twists and turns the market has been making, many believe that special tactics are needed to secure the amount of money they desire from the sale of their home. Two stick out in my mind. Simply put, they are “over-pricing” and “under-pricing”.
I have seen everything from what seems like extreme overpricing ($100,000 or more above what seems like a reasonable asking price) to modest positioning above apparent market value.
The truth is that this can be a successful pricing method if used conservatively… that is: determine the reasonable asking price for your home, and then price slightly above in the expectation of creating negotiation room. I do have to say however, that in the current market climate, even moderate overpricing can be a tricky and dangerous route if you would like to sell, instead of watch your property sit. The longer a property stays on the market, the more you risk losing momentum and appeal. There is a quote from Tom Ferry, a well-known real estate authority that says it all- “The most important decision we’ll make is around price. We have two choices: The Seller price and the Sold price. Which one is higher? …The Seller price.” The dangers of overpricing include:
- Attracts “lookers”, not legitimate Buyers,
- Implies that you are not motivated to sell,
- Reduces the number of showings,
- Helps the competition, and
- Invites potential appraisal problems.
The other method, under-pricing, is an effective technique in many cases. This technique does not need to be used extravagantly either… a little can do the trick. It can stimulate interest right off the bat. Instead of your property being one of many that are priced comparably with their property “kin”, yours creates excitement as in “Honey, look at this one… This looks like a really good deal!” When used effectively, this tactic can even trigger bidding wars. I’ve represented at least one Buyer recently where this technique was apparently being employed by two Sellers of properties my client wanted to pursue. We secured the home in the second offer (phew!) but negotiated through two competitive offer situations in one week to accomplish that! (Yes… in this market.)
Note that several factors affecting the appeal of your property are not in your Realtor’s control… Your Realtor cannot control: location, property condition, market conditions, timing… or price. Your Realtor can control marketing, exposure, and the advice they give you. I often remark to my clients that pricing is really not so mysterious, and more a matter of just looking at the facts- We survey comparable properties and what they have SOLD for… then make a decision as to how the subject property measures up, and price accordingly. Most importantly, remember that the ASKING price is your decision, whereas the SOLD price is ultimately the Buyer’s decision, and is what really determines ‘market value’. That said, though a Buyer may offer less than you wish (or they may not!) it is still your decision as to whether you will accept an offer, negotiate, or simply refuse. Listen to your Realtor and then make a decision based on the data presented by him or her. They want to help you sell!
As much as you would like them to, the following conditions do NOT affect your home’s market value/price:
- The profit you wish to make from the sale,
- The amount of money you’ve spent on improvements,
- What friends and trusted associates have told you it is worth, and
- What you originally paid for the home.
So, bottom line, the price you decide upon should be based on related SOLD data, and then tempered to your home’s specifics, and your desired timetable. Summer is here and homes are selling! Enjoy the ride, and accomplish those changes you want in your life through the sale of your home. Pricing appropriately can really help speed you to your goal.