Strategic pricing!
Most of us know the importance of pricing. Some will never learn!
When listing a house there are many strategic price points. I find that most people who are interested in buying, don't go over the strategic loan amount given by their lender. So say your lender approves you for a house of $300,000. Most buyers instruct their agent to find them houses up to $300,000. So pricing your house at $305,000 or $310,000 is going to keep your house from being seen by the maximum amount of buyers. Another fear of most buyers is becoming mortgage poor! (Being at the top of their borrowing range.)
In most listing presentations that I perform in, the seller inherently grabs at the price in top of the range that I give them. There is nothing wrong with that because they want to optimize their profit however the second question is always how long do you think it will take to sell my house. The answer usually corresponds with a strategic price point and the competition that lies in the price range.
Say there are five homes, all of comparable size, age and condition. Your agent wants to come in and price your house at $299,950. This puts your house below the two homes over $300,000 and above the two homes that remain.
From my experience;
- The two homes over $300,000 will get more scrutiny for being more expensive. If their days on the market are over 30 days the buyers will consider that something is wrong with the house, not the price.
- The two homes lower than $299,950, will also be scrutinized against your house. Any outdated appliances or floor coverings will be noted. The colors of the house will come into question.
- Do you wanna help sell someone else's house, overprice yours!
Can you see a pattern? Everyone is being compared to the house in the middle at $299,950. You are the benchmark for quality, color, and price. That's where I want to be and 75% of the time this home sells the fastest...
This post was authored and picture taken by Paul Henderson ©2012, All Rights Reserved, This content may not be reproduced or reprinted (Except for ActiveRain Re-blogging) without express written permission of Paul Henderson, RE/MAX Professionals, Tacoma, WA.
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