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Pricing Is Everything In Today's Buyers Market!

By
Services for Real Estate Pros with Web Email Flyers

Pricing a home is the most important factor in getting it sold quickly.  It has been said that 90% of marketing a home for sale is price.  Knowing how much your seller's home is worth is a key essential which can save you time on the market and advertising expenses.  By properly pricing your seller's home, you will receive the most amount of exposure from potential  looking for a home just like yours.  The longer the home is on the market, the lower the final selling price of the home will be. 

It is imperative to price the home to sell.  If your seller's home sits on the market due to it being overpriced, then prospective home buyers will possibly think that there is something wrong with the home.  Or, the longevity on the market may cause very low offers from potential buyers trying to steal the home for a much lower price than your seller is asking.  The offers that sellers receive after the home has been sitting on the market for a long period of time are typically lower than those received in the first month when the listing hits the market, and buyer's activity on the home are at its peak.  Remember, that the first 30-345 days when the home hits the MLS is when the home will get the most amount of exposure to potential real estate agents with buyers looking for a home just like your listing.

Can't I Come Down In Price Later?

Many home sellers are caught up in the past when the market was booming.  When sellers decide to list their homes in today's real estate market, they price their properties thousands of dollars above market value.  The number one reasons that homes do not sell is due to unrealistic expectations concerning the value of their home.  Your sellers must be realistic when setting their price and must understand that the market is ever- changing.  You must be aware of the market conditions in your area and show the statistical data to your potential sellers.  If there haven't been any offers on your seller's property after 10 showings or after 4 weeks of it being on the market, it is time to adjust the price.  Don't be afraid to tell your sellers to lower their price in order to keep their homes from becoming stale.  They must lower the price of their home to a level that will attract potential buyers.  As agents, you should also place a special clause in your listing agreement stating that the price will be reduced after 10 showing or 4 weeks on the market without any offers.  After the seller agrees to this added term in the listing agreement, it will be a lot easier to change the price of the property after the 4-week period. 

Don't get caught up in how much money yours sellers have already invested into their property with the cost of improvements over the period of ownership.  Prospective home buyers are not concerned about the needs of the sellers, only their own, and they are not willing to pay anymore than the amount of a comparable home in the same neighborhood.  Regardless of listed price that you and your sellers determine for the asking price, the market will always determine what the price of the home will bring in today's market.  Be very aware of what the market tells you.

Offer Incentives:

Sometimes buyers need cash rather than a lower sales price in order to be able to afford a home.  A sales price adjustment of $2,000-$5,000 will not affect the buyer's monthly payment tremendously with a 30 year mortgage.  However, a cash incentive, such as "Seller Pays $3,000 Towards Buyer's Closing Costs" may greatly affect the number of buyers that can afford the property.  With interest rates on mortgages and taxes rising, buyers are looking to pay as little money out of pocket as possible.  Remember, by offering to pay a portion of the buyer's closing costs will attract more potential clients and make the seller's property stand above the competition in their area. 

Selling Bonuses:

In a competitive buyer's market which we are currently experiencing, buyers' agents have many more properties on the market to show their prospective clients.  By offering a very competitive buyer's side commission will entice an agent to show your seller's property over the many other ones on the market.  Think about this:  If an agent has a buyer that is interested in a particular area, the agent will find all of the available properties to show his/her client.  The agent will first show the properties that are offering the highest commission to the buyer's agent.  Again, this is why it is imperative to offer the most competitive commission to buyers' agents.  I suggest that sellers offer at least a 3% commission to buyers' agents.  I wish you luck.  Michael Citron of WebEmailFlyers.com  

Comments (5)

Joe Peffer
Delicious Real Estate - Columbus, OH
Columbus Homes Blog
Right on. No, Mr and Mrs seller, you can't, "always come down later". That is, not if you realistically want to sell your house. Inventory is brutal. Pricing is king.
Jun 04, 2007 08:48 AM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Beware of a common reason for overpricing: "we have to get this much because that's what we owe"...  The rest of the story:  "we refinanced and spent our equity already on a vacation/car/boat, etc".  You can't spend it twice!

Jun 04, 2007 09:05 AM
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic
Great comment Joe. Pricing is EVERYTHING!!! It's like the old saying "You may not get a second chance to make a first impression". Trying to convince some sellers of this at times is very hard. They usually get it after the first 60 days..
Jun 04, 2007 09:06 AM
Joseph Grabowski
Keller Williams Preferred Real Estate - Yardley, PA
REALTOR - 4saleinbucks.com
And as much as we can tell homeowners this, they still insist on listing it at the price their neighbor ogt over a year and a half ago. The home sits while the buyer pass by to the ones that are priced right. In my area there is plenty of inventory and a few for sale in each and every neighborhood it seems.
Jun 04, 2007 09:23 AM
Leo Namiot - LeoLends.com
Canopy Mortgage - Leo Namiot - Saint Augustine, FL
More than just great rates
You are right on target with this. Great blog thanks for the post
Jun 04, 2007 11:01 AM