Of all the mistakes sellers (and their agents) make...I think this one is the most easily correctable and the one made most often!
...now I work on the Florida Space Coast. We are a medium sized market that has little crossover from other areas within the State (we are too far from Orlando for most agents to travel here..and it would require those agents to sign up for our MLS and pay some pretty high fees). This has both positive and negative aspects for potential buyers (and sellers). On the good side the agents you hire usually have a decent knowledge of the area. On the bad side it means they can tend to be behind the times on new marketing techniques that can help a home sell more quickly.
This leads me into how to price a home. As agents we all have access to the same MLS statistics. We can read the data and come up with what we feel are the best comparable homes to use for both active listings (those homes that your listing will directly compete with) and sold listings (the best comparable sold homes that will help determine what an appraiser will likely assign as value). An experienced agent will usually understand how to adjust your particular home up or down in value based on what your home is like compared to other similar homes in the area.
Based on these findings a good agent will arrive at what they feel is the best option for you to get maximum return on your investment while also selling in the quickest possible time frame (you do not want to pay three extra mortgage payments holding out for an extra $1000).
Here is when the situation turns sticky for even experienced agents (and in areas like the Space Coast that to be behind the trends of larger markets). Some agents feel they have been in the business for a really long time and know everything about how to best market and sell homes....after all they have been doing it this way for 20 years and it always worked before! They tend to whittle down the competitive homes to three active and three previous sold listings. They will average these homes values (adjusting for square footage) and arrive at a value.
Here is an example:
Sold comparables sell for $120 per square foot. Active comparable are priced at $130 per square foot. Your home is 1145 square feet...so they will tell you that $130 x 1145 sqft = $148,850...now they tell you to price your home at $147,990...this way your home will be priced lower then the competitive listings (per square foot) and you will have a better chance to sell first.
This is really bad advice...but happens every day in the Real Estate Industry!
Pricing strategy has less to do with being one or two dollars per square foot lower then other competitive listings...it is all about getting you the most potential views online. The more people who view your home the better chance you have of selling. I have never had a buyer tell me "I am not interested in this home because it is one dollar higher per square foot then the other homes".
My Opinion:
In the above example price the home at $150,000 exactly (not $149,999). Your home will get in more searches on the internet as well as go to more potential buyers when automatic email notifications go out (agents can set up homes to go to buyers automatically if it fits in their specific criteria). People search from hard numbers! When they start their search they will search from $150-200k or $125-150k...not from $149990 to 198,650!!!!
If you are priced at $150,000 your home will either be the most expensive home in the lower search or the least expensive home in the higher search...but it will be in BOTH searches!
Just think about this: If your agent recommends a price of $149,990...that home will never be seen by buyers looking in the $150-200k price point...that $10 mistake could cost you the sale of your home.
Agents who recommend a pricing strategy like this are telling you they do not understand the Internet or how people shop on it...and with 95% of all buyers going to the Internet first before buying a home...can you really afford to hire an agent who does not understand this most important marketing tool?
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