How not to price your home:

  1. Take your mortgage balance.
  2. Add your credit cards.
  3. Throw in your cars.
  4. Add a generous portion of all the money you borrowed from relatives. 
  5. Pile on your down payment for that other house you have your eye on.
  6. Last but not least, give yourself an extra 50 grand just for being you. 
  7. Get a blank look on your face when you are told that the buying public doesn't care what you owe. 
  8. Wait.
  9. Wait some more. 
  10. Decide you'll stay after all. 
Here's a better plan:
  1. Find out what homes like your have sold for in the past 90 days
  2. Price the house at that number or 5% less. 
  3. As my son's teacher says "you get what you get and you don't get upset."
  4. Pack your bags.
The buying public is utterly ambivalent about what you owe to whom as it relates to pricing your property. They only care about their own needs. What you need isn't on their radar, and if you aren't priced in line with the current perception of value, your listing will get stale and sit unsold for months as you chase the market. 

Chasing the market is always being one price point behind what the public is willing to pay. You enter the market at $599,000 when you really ought to be at $549,900. You lower to $575 when the market for the house is $525,000. By the time you hit $499,000, it could be a year later and the public isn't willing to pay more than $450,000. Each price drop seems harsh, but your real enemy was starting out too high. 

Sellers are in a war of attrition with buyers who lurk before they call, call before they look, and look at everything before they buy. You won't get a call, look or offer until your price conforms to what the public deems fair. The only offers overpriced homes get is low ball offers from bold types who wouldn't pay as much as fair minded people would on a fairly priced home. The only way to win the battle is to price as aggressively as possible and not allow your ego or personal preferences to cloud your objectivity. 
Easier said than done!

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25 Comments on How NOT to Price Your Home

20 Most Recent Comments Displayed Show All

NOV
28
2009
251,523 Points 7 Featured Posts Outside Blog Called Shot Master

Thanks for the post. A seller who selected another listing agent because they would list it higher, dropped by an open house I held recently and said, "I should have listened to you."  It had been 8 months and their home was now priced way below our recommended price which was a good price when we suggested it.  They chased the market down and lost thousands.
2:34am • #6
102,960 Points Attended Rain Camp

This is all common sense but its hard to get clients to understand that it is not 2005 anymore when any price you asked, you could get.
5:18am • #7
813,217 Points 243 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Tom- absolutely! We all were so smart because if we priced the house wrong the appreciation curve kicked in. Voila! We just outran our mistakes. Now pricing is a science. 

Dan- Hopefully you'll get the listing after they expire. 
6:40am • #8
730,035 Points 15 Featured Posts Outside Blog Called Shot Master

J. Philip, very pointed post. Agents should also read it carefully. Chasing the market is always a losing proposition.
7:54am • #9
620,089 Points 8 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

English Major pulled a good one again! Thanks for a good laugh and a great post!
8:02am • #10
229,018 Points 22 Featured Posts Outside Blog Hit Router Attended Rain Camp Called Shot Master

Excellent post!  I can't count how many times I've had to help a seller see the light when they've tried to price their home the wrong way. 
8:48am • #11
333,351 Points 4 Featured Posts

Very good post and so true. I am going to reblog it(thank you) on localism

Ty
9:06am • #12
984,549 Points 106 Featured Posts Localism Sponsor Outside Blog

I'd say that pricing is half art and half science. I look at each category when I price, especially regarding short sales. I was pricing a short sale in El Dorado Hills yesterday. The "active short" listings were $50,000 to $100,000 higher than the "active short contingent" listings. It's easy to see what was selling and what wasn't. The seller felt she should get a higher price than the price I suggested. I then explained that list price and sales price are 2 totally different animals in this market. Most homes, if priced below market, sell above market.
11:23am • #13
439,104 Points 2 Featured Posts Outside Blog Called Shot Master

Hi J Philip~  Oh My Gosh! This is great!  I have got to re-blog this one for sure! 
5:52pm • #14
974,629 Points 6 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Yep, this is a reblog, a bookmark, and a reread. Thanks for the input!
6:43pm • #15
420,205 Points 22 Featured Posts Outside Blog Hit Router Attended Rain Camp Called Shot Master

A reblog indeed - could not have said one word better myself. Thanks!
7:44pm • #16
228,392 Points 1 Featured Post Called Shot Master

Applause, applause.  Well written and too the point, thank you JPF.
8:02pm • #17
249,203 Points 13 Featured Posts Localism Sponsor Outside Blog

Great post!!!!

Have you seen David Knox video " Pricing your home to sell?" It is very good.

I have my sellers watch it, and STILL sometimes it does not break the denial.
8:07pm • #18
987,760 Points 49 Featured Posts Outside Blog Called Shot Master

J. Philip - This is an excellent and straight forward post on "how Not to price your home."
8:07pm • #19
715,535 Points 69 Featured Posts Localism Sponsor Outside Blog Called Shot Master

You said everything I've been wanting to say to my clients.  Your post was perfect.  I'm reblogging it as well and have flagged it for a Featured Post.
11:31pm • #20
3 Featured Posts

I'm all for being candid and I love the line about the buyer doesn't care how much you owe. Thanks.
11:59pm • #21
NOV
29
2009
425,063 Points 22 Featured Posts Outside Blog

This reminds me when I lived in Brazil for some time and was looking at some real estate there. It was not uncommon to increase the price the longer it took to sell because the seller was adding all these extra expenses, some of which were very interesting... ~Rita
12:01am • #22
695,884 Points 39 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Hi Philip,

Congrats on your gold star here.  We've added you to our associates since we do get to refer business up in your area occasionally because you are not far from us!  Best of luck to you in the coming 2010!

 

Lisa Hammerstein
11:42am • #23
DEC
10
2009
996,050 Points 4 Featured Posts

And the beat goes on, beating a dead horse that is. I often wonder what goes through the mind of sellers and agents also. But you have made some good points.
12:38pm • #24
DEC
19
2009
1,142,706 Points 242 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Hi Philip!  I'm with Steve--you can preach about those listings that continue to chase the market but, some just won't listen--glad they belong to other agents!!  LOL

Great post--humorous but, real at the same time!

Debe In CharlotteMerry Christmas
12:05am • #25

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J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

Address: 522 North State Road , Suite 100, Briarcliff Manor, NY, 10510

Office Phone: (914) 762-2500

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Phil Faranda is broker and owner of J. Philip Real Estate LLC in Briarcliff Manor, NY. Since founding the firm as a sole practitioner in late 2005, the team has grown to over 30 agents & closed 350+ transactions valued at $140 million. He is in his 4th term as Vice President of the HGMLS. This blog commentary is geared toward consumers and industry colleagues alike. You can reach him at (914) 723-8900.
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