When it comes to evaluating a property and pricing a home properly how often do you look at how your seller will be positioned for competitive properties? I've been guilty of this myself, pricing properties in the vicinity of others. In today's market it's not enough to look at the comparables sales, while looking at the competition; it's about getting ahead of it, getting your sellers out in front. 
Recently speaking with a seller about a potential price reduction she asked ‘How much of a price reduction do you think we need, $10,000 or more?" and "How do you think that would help?" At that point I decided not to give her the $10,000 figure. I said "Before I answer that, let me take another look again at the competition" and she said "fine". Now please keep in mind, I felt we had the property priced well from the beginning, however the market was speaking to us both.
I remembered something I've used very effectively in the past, yet (sorry to say) not again until recently. The importance of positioning vs. pricing, from Tom Tucker, another Realtor (thanks Tom, I hope you're still out there) many, many years ago. In the past, I've explained to sellers "You can price it to sell,...or price it to sit with the others, it's your choice." On the flip side, in most of the U.S. we've experienced an appreciating market for so long, positioning wasn't a big issue. In fact, if you weren't at the top of the pricing pyramid as a seller you may be leaving money on the table. Yet, in a declining market, the opposite is also true.
After another review, it was obvious homes in her area were clustered in a similar price range. Her immediate competition (in the neighborhood) was eight other 4 bedroom homes all within about $2,000-$3,000 of each other. After discussion, I suggested she break out of the pack and get ahead of the market and position her pricing just under the competition. That way instead of being in the cluster, she would be ahead of the game. Since pricing was softening in the area, if she didn't... someone else most likely would. And if they did reduce their price, at that time she would be just following the market downward as opposed to getting ahead of it. She agreed, and positioned herself to be the lowest priced 4 bedroom home for her area.
The reduction wasn't huge nose-dive, yet enough to make a difference by about $5,000. Within 7 days the seller accepted an offer withing the range of her current asking price and was the only sale at that time in the neighborhood.
If you're a home seller in So-Cal it's crucial that your home is priced accordingly with all the foreclosures and short-sales in your market place. Priced competitively your home is most likely to sell prior to the bank repos and short-sales in your same area.
Hence, a well priced "traditional" will most likely sell before the bank repo and the short sale. Doesn't that mean my house should be worth more? Answer, no not in the eyes to a buyer today. Yet when it comes to "speed of negotiation" you're ahead of the pack!
If you're selling your So-Cal home, contact me, Lynda@PreferredHomeBrokers.com
Licensed since 1976, Broker's License Number 00402040, CA, DRE.
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