Can You Price Your Home Too Accurately?

By
Real Estate Agent with RE/MAX Elite 513.520.5305 www.LizTour.com SAL.2002007747

Right on the noseCan You Price Your Home Too Accurately?

In a perfect world home buyers would be non-emotional, just by the numbers.  Able to analyze recent Solds, project market trends, detect a rising market and be willing to pay the price that it takes to get that home.

But home buying is anything but non-emotional, right?  For MOST buyers, that home buying decision is emotionally driven.  They form an emotional bond to the home, or they don't.  If they do, then maybe the analytical process starts and they'll determine what they're willing to pay for a home.  You can bet that number is somewhere south of the list price.  Chances are the recently sold homes aren't all that is driving their decision, but some emotional adjustments are being made to determine their acceptable price to pay.

Mentally they start deducting for all the things they want (or have) to do to make the home the way they want it.  Maybe they assume that because their agent said average Sold to List price ratios are 95% that every home should be able to have 5% marked off?

So how does this effect you as a home seller?  Obviously you don't want to underprice unless you're either gambling on multiple offers to drive the price above list, or speed of sale means the most and you just want to be done.  And just as obviously you don't want to grossly overprice or the buyers won't even come and look at you.

But what can happen when you're priced in the sweet spot, dead on the money?  You've hit it right on the nose, thrown the bullseye and have your home priced almost EXACTLY what should be fair market value? 

Two things can happen:

  • The buyers recognize you're priced appropriately and that you're not there for a 10 round game of negotiation ping pong and just want to cut to the chase and offer accordingly OR
  • The buyers don't recognize you're priced appropriately and can't reconcile their emotion with logic.  They may get miffed that they're not "being given enough of a deal".  It's enough to make you wish you'd intentionally overpriced your home just so the buyers could feel like they got "a deal"!

Just be prepared, either reaction is possible with a priced right listing.  Too many buyers in the 2nd category and you can expect to work through more than one offer before getting one that works for both you and the buyers.

If you have questions on selling your Warren County home, please contact us!

Serving Warren County's residential real estate needs,
Liz and Bill aka BLiz

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Serving Warren County Ohio & Adjacent Areas

 

The Liz Spear Team of RE/MAX Elite
Elizabeth Spear, ABR, CRS, Ohio License SAL.2002007747

William (Bill) Spear, CRS, Ohio License SAL.2004011109  Kentucky 77938
Ask for us by name if you visit the office!

EHO Two locations: Lebanon & Mason, OH
Bill Direct:  513-520-5305
Liz Direct: 513-265-3004     
Fax: 866-302-8418

MailTo:  Liz@LizSpear.com

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Rainmaker
820,770
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Liz/Bill - the key to home selling - price, price, price.  And, great agents like Liz and Bill Spear can provide the necessary information to price it correctly.  

May 14, 2012 10:11 AM #16
Rainmaker
420,748
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Bliz, 

You hit the nail on the head here.  There will be folks that fall into both categories.  Only when folks who want to over less than list price as a fundamental LOSE out on a home or two will they fall into category 1.

All the best, Michelle

May 14, 2012 10:15 AM #17
Ambassador
2,712,078
Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Ellie, That's the challenge.  The perception that there MUST be a discount no matter how well priced a home is.

Tammy, It's particularly tough when as the listing agent you can see the upward trend happening but the buyers haven't picked up on it yet.

Bryan, We don't have quite that demand here, but we have played the limited inventory card many times over the years to get more for our clients than the market data might have predicted.

Cindy, It's the razor's edge between just right and too much.

John, Fortunately the appraisals haven't been a problem for us.

Kathryn, We're okay with the buyers asking for closing cost assistance as long as they move the seller's net up equivalently.  So far, that hasn't led to appraisal issues.

Juli, We try to nail the right price, but sometimes wonder if we get it TOO close to right.

Michelle, We've encountered both sets regularly, and you're right.  Sometimes it takes some loss to move the Cat 2 people to Cat 1.

May 14, 2012 11:39 AM #18
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3,112,682
Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

Everytime we try to nail down the accurate price, it becomes inaccurate. It's such a fragile science...

May 14, 2012 11:41 AM #19
Rainmaker
1,267,563
Al & Peggy Cunningham, Brokers
RE/MAX West Realty Inc., Brokerage - Brampton, ON
Our Family Wants To Help Your Family!

This could be a toughie BLitz. So many buyers want 'the deal'. We always advise buyers they purchase much better if they offer 'near' where they think the Seller will sell. When buyers come in too low, its just an automatic sign back from the Seller. 

May 14, 2012 11:45 AM #20
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Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Paul, It is, and it's a moving target as other homes sell and go on the market.

May 14, 2012 11:49 AM #21
Ambassador
2,712,078
Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Al & Peggy, And sometimes it's priced dead on and there's no wiggle room from the sellers.  Maybe they can give back a little, but not much.  And sometimes the buyers just can't deal with that fact.

May 14, 2012 11:51 AM #22
Rainmaker
528,812
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa
That is a tough situation. The key is to think like a buyer when you receive that first offer. And leave a little wiggle room for negotiating because there will always been a little haggling....even for a couple thousand in closing cost assistance! Great post.
May 14, 2012 01:40 PM #23
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Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

I met with a seller yesterday who stated that if they went with my suggested list price, there would be no room for negotiation. I told them that they should always be prepared for negotiation no matter what the price.

May 14, 2012 03:21 PM #24
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2,712,078
Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Karen, And every now and then the sellers surprise you with just how little they're willing to move off of list price.  With our median price point below 200k there's not typically much room between a correct list price and having someone think it's overpriced.

Tammie, And that's true.  No matter what the price (unless it's intentionally WAY underpriced to start a bidding war), the buyers ALWAYS want to go lower than list.

May 14, 2012 08:05 PM #25
Rainmaker
2,346,102
Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

Just noticed this morning that you hit 700K..............Congratulaltions!

May 14, 2012 08:46 PM #26
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2,712,078
Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Roger, Thanks!  Just rolled over the pointometer yesterday evening (with a comment on your post!).

May 14, 2012 08:50 PM #27
Rainmaker
257,652
Joyce Godwin, Realtor, CRS
RE/MAX Elite Properties; Serving Cypress, Spring, Tomball, NW Houston - Houston, TX
RE/MAX Elite Properties

Seems that lots of buyers have to "try" regardless of how a property is listed - on target, high, or even low to begin with.  Most seem to be willing to get reasonable, but just have to "try" first, so they will mentally know they couldn't have gotten a steal.  Sometimes this costs them the home though if another buyer makes an offer at the same time and is more reasonable to begin with.

Just read Roger's comment above.  Congrats on hitting the 700,000 mark!

May 14, 2012 09:55 PM #28
Rainmaker
2,346,102
Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

Sweet!

May 14, 2012 10:02 PM #29
Rainmaker
5,428,773
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Very good advice for home sellers.

Have a most productive week and home buyers take advantage of the record low mortgage interest rates.

May 14, 2012 10:10 PM #30
Rainmaker
877,398
Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson

I also see that offers come in low no matter what education the buyers are given. They just want to put it out there and "not overpay" Some of the offers are really quite ridiculous and buyers don't even negotiate anything. They are just putting it out there and what ever sticks is where they will live. When i see them move into something that is less home, less money and greatly in need of repairs rather than a new home, i wonder if they realize what they are getting into. All those repairs are going to add up to what they would have spent on a brand new home. I hope their agent let them know that. The cost of the repairs does not go into a low interest mortgage payment.

May 14, 2012 10:36 PM #31
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Bliz that is so, so true especially the second point about buyers feeling like they can't get a deal when in reality, they are already getting one.  People?  Sometimes you just can't please them.

Definitely featuring in Bananatude.

May 15, 2012 12:50 AM #32
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Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Joyce, Thanks!  And I understand the "try" part, but once it becomes clear the seller isn't letting that happen they need to get serious quickly if they truly want the home.

Roger, Another 20 weeks and we can hit 800k :)

Roy, Certainly some great rates out there for buying or refinancing.

Janis, Sometime hard to rationalize people's decision.  Easier to figure out when the home is just a HOUSE, a pure commodity with no personal stake in it.

Charita, We've had listings that were no doubt a great deal, but the buyers just couldn't get their heads around not getting a big discount on top of that.  Oh well.........

May 15, 2012 02:58 AM #33
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854,219
Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

I meant to read and comment on this the other day.  Pricing is such an art form and many, many variables must come into play.  But bottom line up front, no grossly overpricing anything or you just sit and sit and sit..

Some times the sweet spot is a bit over to give everyone some negotiating room :).  Either way, unless the buyer must have the home right now, they will offer lower "just to see".  Great post!

May 17, 2012 01:12 PM #34
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Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Brenda, Depending on the price point, the margin between just right and wrong can be pretty thin.  Bring the offers and hope that at least one set of buyers and their agent understands how accurately the home is priced and willing to pay accordingly.

May 17, 2012 08:13 PM #35
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