Beware of the high price tactic! It has been used for years and continues to hurt uninformed sellers. Once you read this page you will not only be able to see when and why this strategy is being used on you but now you will be able to profit by avoiding it! This tactic is also called "Buying Your Listing".
HOW YOUR ASKING PRICE AFFECTS YOUR SELLING PRICE
There are 4 common strategies that most sellers use to price their homes. It is unwise to assume that a higher asking price will net you a higher selling price. In fact, often this equation works in reverse, especially if you're not paying attention to what the market is telling you. Remember, you cannot "fool the market" with a high price. Please consider these facts when you set your asking price.
1.) Clearly Overpriced - Every seller like you wants to realize the most amount of money they can for their home, and every real estate agent knows this. If more than one agent is competing for your listing, an easy way for the agent to win you over is to over-inflate the value of your home. Often we will see new listings that are priced at 10 - 20% over their true market value. This is very unfair to you - and once you are listed with the agent who convinced you to go with the high price, that agent will persistently ask and pressure you for price reductions in order to sell... ouch! This is called the "High Price Tactic" and is clearly not in your best interest. In most cases the market won't and can't be fooled. As a result, your home could languish on the market for months, leaving you with a couple of important drawbacks:
***your home is likely to be labeled as a "troubled" house by other agents, leading to a lower than fair market price when an offer is finally made
***you have been greatly inconvenienced with having to constantly have your home in "perfect showing" condition for months ... for nothing.
***homes that are clearly overpriced often expire unsold, forcing you to go through the whole listing process all over again, often with poorer results than had you listed at the right price in the beginning.
2.) Somewhat Overpriced - Often about 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market longer than anyone would want. There is usually one of two factors at play here: either you believe in your heart that your home is really worth this much despite what the market has logically indicated (after all, there's a lot of emotion caught up in this issue), OR you've left a little too much room for negotiating. Either way, this strategy will cost you both in terms of time on the market and ultimatey the price you will receive.
3.) Priced Correctly at Market Value. - Smart sellers understand that real estate is part of the capitalistic system of supply and demand. They will carefully and realistically price their homes based on a thorough and complete analysis of other sales and the "competing" homes on the market. These competitively priced homes usually sell within a reasonable time-frame and sell very close to the asking price. When your home is priced correctly, it should sell for 97% to 99% of asking price!
4.) Priced Below Market Value - Some sellers are highly motivated and require a quick sale. These homes attract multiple offers and sell fast - usually in a few days - at, or above, the asking price. Be cautious that the agent suggesting this method is making this recommendation with your best interest in mind.
HOW TO GET THE PRICE YOU WANT (AND NEED) FOR YOUR HOME • When you decide to sell your home, setting your asking price is one of the most important decisions you will ever make. Depending on how a buyer finds your home, price is often the first thing he or she sees. Many homes are discarded by prospective buyers as not being in the appropriate price range before these homes are given a chance to be shown.
• Your asking price is often your home's "first impression", and if you want to realize the most money you can from your home's sale, it is imperative that you make a good first impression because this is not as easy as it sounds....your pricing strategy should not be taken lightly. Pricing too high can be very costly to you. Taking a look at what homes in your neighborhood have sold for is only a small part of the process, and this on it's own is not nearly enough to help you make the best decision for yourself and your family. We at the Toombs Team, will guide you through the process along with educating you about the other items to consider.
• The information I give you here will help you understand some important factors about pricing strategy to help you not only sell your home, but sell it for the price you want.
PRICING STRATEGY STARTS WITH GOOD INFORMATION
Before you can begin to know what your home is worth, you should do some research, bearing in mind the following: • An analysis of what homes have recently sold for in your neighborhood is NOT enough to help you properly price your home. A quick scan up and down the street at the prices of homes that have recently sold will give you a starting point. However, this is not nearly enough for you to base your entire pricing strategy on. It is most important for you to understand how buyers look for a home.
• Go back in your memory and think about how you conducted your house hunting search to find the home you are now thinking of selling. You most likely did not confine your search to a single neighborhood, but perhaps you looked in different neighborhoods or areas in order to find the home that best matched your needs and desires.
• The prospective buyers who will be viewing your home, will conduct their searches in a similar manner. That means they will be comparing your home to, for example; brand new builder homes, century homes, 10-20 year old homes, etc. They will also consider different suburbs, communities and counties. Each home will have a different look and feel and it's quite possible that a prospective buyer might consider all of these variables in the search for their home.
• You can see when you're selling your home, you're not just competing with the home around the corner, but also with all homes in other areas which have the same basic characteristics: i.e. number of rooms, overall living space, features and extras, etc. In conclusion,
• Remember the importance of understanding buyer behavior when pricing your home.
• Your asking price should be competitive with EVERY type of home that shares the same basic characteristics as yours.
• To come up with a competitive price in today's ever-changing market it will take a fair bit of research and a lot of knowledge.