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Effective Pricing Leads to Success

According to a recent report, about 75% of homebuyers surf the Web to begin their home search. That means home buyers are well aware of what properties are available on the market and the prices they are selling for. Therefore, now more than ever, pricing is the key to selling your home.

Some sellers think that a higher price will give them some negotiating room. But in fact many buyers don't even look at a property that is overpriced, much less make an offer on it.

This can lead to the property's becoming "shop-worn." Buyers often inquire about the length of time a property has been on the market. If it has been on the market a long time, they wonder if there is something wrong with it. The sellers then have to drop the price, taking less than they might have if they had priced it correctly to begin with.

Homes that are well-priced attract the buyers in their price range. The buyer's perception is that the home is a good buy, and then the seller is positioned to receive the listing price or close to it.

Please feel free to call or email me if you have any questions. I would be happy to provide you with a market evaluation on your home to make sure it is competitively priced in the marketplace so you will receive the best offer.

www.BrianSharkeyRealEstate.com
Brian@BrianSharkeyRealEstate.com

Posted by Brian Sharkey South Florida Realtor on 11/14/2009 06:09 AM

Comments (61)

Sell Faster in the Home Selling Channel

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61 Comments on Effective Pricing Leads to Success

NOV

great post - the lower the better as that will draw offers - most houses in my market are either selling at a big drop from list prrice or right at the list price assuming it is correct

If only listing agent could get the message across that "the more eyes" the better chance of selling. For every $10,000 in price reduction, the number of "eyes" increases.

Overpriced properties don't sell and even if they get an offer, do not appraise.

They just eat listing agents alive.

Absolutely right.

Price it right and they will come,

Brian - Very true. Overpriced properties are less likely to sell quickly and are less likely to be viewed by those who would actually purchase it.

Adding dollars that you'll never get anyway adds to DOM(days on market ) !!!!!!!!!!!!!!!!!!!!!

All sales are a numbers game...the better the numbers the more people see...the greater the number of eyes, the better the opportunity to sell.

Nice job on the blog Brian! Price it right and they will come.

~Deb in Cape Coral, Fl

Brian -

Well said. I have never seen the "negotiating room" tactic work. It just reduces showings.

Brian, great post! Now if only the sellers would understand over pricing and appraisals.

It's the money, honey. If the buying public cannot reconcile the price and product, they sit on their hands. I have had long slow price reduced homes be purchased by people who told me flat out that they waged a lurking war of atrition, waiting for the price to come down before even bothering to take a look.

Brian:

Sad but true, when agents take over price listings they hurt the seller and themselves. It is called seller motivation.

Great post! I know that Zillow even posts the # of days that the home has been on the market, so it is so important to not let it sit on the market forever.

Brian.....my team members won't list an over priced turkey.....we leave the listing appointment on very good terms and usually get the listing second time around at a nice price....that seller already went through punishment, now they listen to our direction.

On lower priced homes I have started offering to do a 60 day listing if the seller will list at the price I know willl receive an offer. A few times the lower listing price has led to a bidding war and the home ended up selling for much higher than the the listing price.

Brian, the sellers know this but usually have blinders on and think their home is the exception to the rule!

Brian, days on the market can often result in a lower offer. Price it right for maximum exposure. Good Post!

I couldn't agree more. In fact I recently blogged here on the same subject...slightly different tilt but the same subject. Check it out http://activerain.com/blogsview/1314339/market-pricing-now-there-is-a-novel-idea-

Price is sooo critical and so many just don't get it. Oh they talk it but do they really get it... Thanks for the post!

I have been singing this tune for ages. People are still chanting location, location, location. But it is price, price, price, BASED on location and condition that makes the difference. A hovel in the middle of Manhattan will garner you millions and a palace in the middle of Three Mile Island will go for a very low price. Unfortunately, sellers think their home is the best on the block and will keep it even just a dollar above a twin down the street (or today quadruplets) and then scratch their heads when the other home sells and theirs does not. Of course, the next thing is to blame the agent. Goodness, people are not flocking to see an over-priced property????? Imagine that. I love the sellers who are cagey and tell me "Let's take the competition off at the knees and undercut them on the price". That is a smart seller who, in the long run, will likely make more of a profit than his neighbors. I do not take on the other kind that insist on putting their home at the top of the list.

Brian: I love this topic. Incidentally, it is on my list of topic that I have for my weekly blog. Some very good feedbacks. Besides location, price is the biggest differentiator when it comes to selecting one property over another.

I like your "shop worn" verbiage. There are some good points here!

You are absolutely right. I lost three listings because I was right about the price, and would not take them just to get the listing. Those three homes just sit in MLS with no activity. I have better uses of my time than to try to market something way over-priced.

About to blog on this as well.

Listed a house here in Twin Cities on Wednesday. We had 3 showings on Thursday and 3 offers to choose from last night. Seller got $5k over list price with a very solid offer. Certainly the seller played a large role as they had their house in primo showing condition but it will be a great story to be able to share with potential clients - houses are moving in this market.

Right on the money. Informed buyers using buyer representation often come prepared with comps anyway before they make an offer. Who's trying to fool whom?

Great post, I have this same conversation all the time with my sellers. Most of them don't want to hear it.

I set the price 99% of the time or walk away. I do occassionally take an overpriced listing if it fits my system and I know the owner will come down. But folks do not know what their home is truly worth to a buyer and I will tell them. But I know my market, it is not a guessing game. I have found folks are looking for a professional that can get their home sold and appreciate the honesty even if they don't want to hear it.

Brian, this is good advice. Sellers need to make the decision to either sell or take their home off the market.

Well spoken Brian, some sellers just don't seem to understand that everybody's property values have decreased and they need to use a REALTOR and price it according to their suggestions in order to sell their house in a timely manner.

So true, this is so true!

Patricia

Seller need to learn to stay ahead of the market

your are correct thank you for the post.....

So right you are - the biggest determining factor in how fast a house will sell is its price. Even condition isn't as important as the price 'cause even a house in poor condition will sell quickly if priced right.

Nicely put Brian - I even think that the # is higher than 75% for home searches beginning on the web !

And congrats on the feature :o)

Brian - agents have been talking about these issues for a very long time. Some folks still don't want to listen adn need to find out for themselves the hard way.

It's important to keep saying it - more may get it.

Jeff

This is good advice, and something that I go over with my sellers. They're more likely to sell for more money if it can be sold sooner than later before the honeymoon phase is over.

NOV

Brian, great points about overpricing homes. Pricing them high usually will back fire as it becomes stale listings.

Here is a pricing strategy for all to consider. Price the home below market value! This can lead to multiple offers and we all know what that leads to - bidding wars.

Slightly Less <--> Slightly More

If priced slightly less than market, you will get more agents who realize it is a great deal, and bring more buyers, thus raising the price.

Oh yes especially now. The market is very challenging. In an up market one can hope to catch up but that still is tricky. Best to price well in the beginning

It's the single most critical aspect of selling ... today more than ever.

Good post and great points!

You are so right, today's buyer has so much more information and data available to them. It gets me sometimes when I see price changes of a couple hundred bucks. Come on people, why do you think that is going to open the flodgates? Great post.

Pricing is key !

Boy, Is there a way to share this entire thread with my stubborn client who keeps saying things like"it only takes one." I guess the next time he says that I can say "no, it only takes one AND an appraiser living in your dream world."

You're probably wondering why I still have the listing--so am I!

Pricing is key. I do think with very high end homes it does take longer to find a buyer as often there are not a lot of buyers with the means to afford the property.

As an aside on this issue, due to being new to the area when I became a real estate agent a few years ago, an important part of my business has been getting listings from expired listings. I continue to take that route as a portion of my business(believe it or not I have actually had success with this) due to the number of sellers I have talked to who continue to think their property is worth about 25% more than it really is(which happens to be the percentage the market has dropped in our area since this whole mess started) -they aren't listing. Needless to say, an agent's work is really cut out for them, particularly in this market, when dealing with sellers who have already been on the market for in many cases six months. It's amazing to me how many of them still have not learned the lesson that correct pricing is essential to their success. The job becomes one of at least getting a minimal reduction at the outset and constantly pumping them with information in hopes that when it's sitting in front of them that it becomes undeniable that they have to address the issue of pricing the property properly. AND - this is key - when that price reduction is not at least in the ball park, or if there is not underlying motivation for the seller to sell, or it just doesn't appear there is even a prayer that the seller will be receptive to the professional advice you are providing - and most important of all that the property is marketable and saleable, I can only say - politely thank them for their time - and let it go. This is not a market for sellers who are not willing to do what they need to do to get their home sold.

I agree with your premise, but disagree with one statement. You said buyers are well aware what houses are selling for because they surf the web. I think buyers THINK they're aware, but they really have no idea what the condition of those properties were, how much the prices were affected by short sale status, how much value an intangible such as a view adds, etc.. That's where a listing agent's value comes in - somehow getting the message across to those web surfers why this house is priced where it is. After all, a lower-than-other-houses price can cause buyers to wonder what's wrong the house.

Thank you for reminding me of this important fact. Many times people have such an emotional attatchment to their home and they put a monetary value on it. They forget that buyers do not know or care about those attatchments and memories and that they are of no relevance to price.

Obviously so true, but you cannot always get the seller to go along.

Hi Brian, Great reminder that buyers look in their price range and not much above it !

Brian

Price in any market is key and as buyers are more informed than ever. $5-10,000 can make a difference

Sellers are not only hopeful of getting a higher price and delusional about their own home being better than the others, they're skeptical. They don't know who to trust.

We all know they really are only safe in listening to a listing agent when that agent is a professional - one who has taken the time and used their expertise to come up with a true market value.

Unfortunately, there are too many stories going around about the OTHER kind of agent. You know, the one who pulls 6 random listings from MLS, adds the prices together, divides, and says "There's your price."

They're out there - I've had dealings with them. They're the ones who won't stay in business long, but they're the ones that people talk about.

The only cure, in my opinion, is to take the time to explain your market analysis so those sellers can understand why you chose those comps and made those adjustments.

It does no good to put a high pprice in order to take a lowere offer if no one looks at it.

Great advice Brian. Many sellers think that market conditions apply to everyone but them.

Totally agree on this strategy. Last home I had listed had 40 showings in a week and a half along with three offers.

Brian, Being a South Florida Realtor I fully agree with you. And I'd like to add that no matter how low we price it-prospects will still offer less...that's the nature of the beast right now.!!!!

NOV

Ok, I saw a "The lower the better" statement here in the comments - Where pricing it right seems obvious, the lower the better seems more like a desperate agent and I would be careful with that - we do work in the principals highest and best interest, so getting them fair market value has to imperative when selling a home. Just dumping the price to get offers, may or may not work, I would want to make a huge disclosure about that.

Asides from that, great post, and right on - a well priced home will sell, over priced is a waste of time in my book, but an underpriced home is right up there. Although many offers, what will you say when they see the comps for the neighbor shows up and are higher?

Yep, not only the buyers wonder what's wrong with the house, the agents wonder too. That comment of room to negotiate falls flat when put to the test as obviously no one wants to even stop by.

NOV

Brian, so true!! Let's hope all our sellers wander in and read this post... it's something I know I'm always trying to drive home!

NOV

This is so true. Preparing the house (staging) and getting the price right before listing is crucial!

NOV

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