No matter what market we are in, Pricing a home right is the most important thing to do

No matter the market, pricing a home right is the most important thing to do.  I recently read an article that talked about Mr. and Mrs. home seller looking for advice on how to sell their home in this down market.  To give you a little background, this couple purchased their home back in 2003 for $419,000, as a home and investment they said.  Also, according to the couple, they turned down an offer to buy the home for $800,000 a year later.  At the time, the couple didn't think the timing was right.  Little did they know, the timing couldn't have been more right.

Flash forward to 2008 where the article says the couple finally decided to put the home up for sale.  They decided to list the home at $829,900.  According to the article, the homeowner spent $75,000 transforming the lot, and upgrading two bathrooms.  So, in four years eight months, the homeowner was looking for a $335,900 (less the $75,000 in upgrades) profit, almost double what they bought the home for.

Now the article goes on to say that the home owners were not able to sell the home, and that we were all supposed to feel sorry for them.  They decided to ask for expert advice to determine why their home didn't sell.  First of all, the article doesn't tell you that these same home owners had listed their home back in June of 2006 for $899,000, and guess what, it didn't sell then either.  The article also doesn't tell you that these home owners also have a rental home.

Anyway, the three experts they sought advice from were a home stager, a horticulturist specializing in xeriscape, and of course a real estate agent.  The home stager liked the home, but said it could use a little color and warmth.  They also said that the home needed to be in tip-top shape in order to compete in that price range, as "You've got some really tough competition out there."  It would cost the home sellers $600 to $1,800 for three months of staging, depending on what was requested.  The horticulturist said the xeriscaping was a little too harsh and monochromatic.  In other words, "There's nothing inviting about the space."  He recommended mature trees for shading, blending desert plants with all the cactuses, and pathways to accentuate areas such as the outdoor spa and firepit.  He also suggested removing the plastic patio table and chairs, and to add large potted plants.  It would cost $2,500 to $6,500 to install a drip irrigation system, and another $6,000 to add six or seven mature trees for shading.  The real estate agent thought the listing could use better pictures, and thought the home was in a great neighborhood.  The agent recommended that the kitchen and flooring need to be updated in the 1979 home.  Here's where it gets interesting.  The agent recommended a list price of $500,000 to $550,000 after the remodel!  That's a far cry from the seller listing the home for $829,900 without the upgraded kitchen and flooring.  It's a $279,900 difference.

These home sellers had their home on the market for a little over a year, and finally took the home off the market just a couple of months ago, after dropping the price to $689,500.  Is it any wonder this home didn't sell?  These home sellers listed their home at such a high price, they were chasing the market down, but not fast enough.  This is a prime example of people being greedy and not listening to professional advice.  This home probably could have sold for $500,000 to $550,000 a year ago, and even with the remodel, the home sellers could have made between $50,000 to $100,000.  That doesn't sound like too bad of a profit in less than 5 years.

Lessons Learned:
Don't be greedy, if the home is an investment, accept any offer that is double what you paid for the home.
Take quality photos, and make sure you are getting exceptional marketing for any home listed over $500,000.
Know what your competition looks like, and what they are selling for.
Broaden the home look to appeal to the masses of buyers.
Be neat, but don't make the home look vacant.
Get rid of anything that makes a luxury home look cheap, like plastic furniture.
Add warmth by opening curtains, turning lights on, adding potted plants, and making the home smell nice.
Leave the home during any home tours to make any potential buyer feel more comfortable.
Price the home according to it's location, condition, and the market.
Keep in mind that, no matter what market we are in, proper pricing of a home is the most important thing to do.