As Realtors®, we tend to understand the market that we’re working in. We know what the comps for a home are, and we know how quickly the market is moving in that area.
That doesn’t mean that home sellers listen to our advice. Unfortunately, we often have to engage in a significant amount of negotiation with our own clients before we can successfully list a home!
Some Realtors® are willing to fudge the listing price a bit in order to win a listing. Don’t let that be you! Here are some reasons it’s vital to price it right from the start.
Dangers of High Pricing
Many parts of the U.S. are in a strong seller’s market right now, and that might be putting dollar signs in your clients' eyes. They may think that because Mr. Johnson sold HIS house for 35% above list, they can expect a similarly high price.
Unfortunately, these sellers often don’t understand the nuances that make homes sell for different prices. Maybe Mr. Johnson is closer to a desirable school or work area. Maybe there’s an extra bedroom or the basement is finished.
Help your seller understand that each home is different, and listing too high can scare buyers away. In fact, your client may miss out on the chance to benefit from a bidding war simply because buyers won’t put in offers on a home that’s already at the top of the market.
Even if your seller does manage to get an offer at the high price they want, there’s a good chance that the appraisal will come in below that number. The buyer will only get a mortgage for the appraised value, so they end up having to pay the difference – or more likely, they’ll move on to another home that’s more reasonably priced.
Pitfalls of Low Prices
Of course, we want to avoid the other extreme as well. A highly motivated buyer might say that “they’re fine with whatever price, as long as it sells quickly.” Help them understand that an appropriate price actually will sell more quickly than a rock-bottom bargain.
Part of the reason for this is that people are wary of things that are “too good to be true.” They will assume there’s something seriously wrong with the property and steer clear. At the same time, folks who want to take advantage of your seller will show up and try to negotiate even less.
Find a way to price a home to move quickly but not in such a way that people assume it’s a sinkhole waiting to happen!
Your Professional Reputation is On the Line
It isn’t fair, but if the seller doesn’t get the deal they wanted, they’ll blame you, not their insistence on an unreasonable price. So don’t be shy about standing your ground!
If you price a home poorly it will sit for sale for weeks, even in a strong market. That makes you look like you don’t know what you’re doing. After all, that’s your sign in the yard!
Take your role in pricing a home seriously. Use comps and market trends, and be sure to remind the seller about appraisals as well. Bad pricing costs everyone time and money, but great pricing moves a home quickly and makes you the hero.
And once you’re a hero, well, it’s the perfect time to give them your business card and ask for referrals!
This post originally shared on PrinterBees' Real Estate Marketing Magazine.
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