They Can Always Make An Offer........

By
Real Estate Agent with Keller Williams Capital Properties DC AB15253

What is your listing strategy? How should you price your home to sell?

Many sellers think an overpriced list price is not a problem because the buyer will see through that inflated number and make a market priced offer.  The reasoning goes - if you price it at market, then the buyers will come in low. Instead, it is preferable to negotiate down to the correct price that the sellers always planned on accepting.  

There are some big problems with that approach. 

1. The wrong people look at the property - if any look at all. People buy in price brackets and they look in those same brackets.  An overpriced property compares badly with other properties that the buyer is seeing on line and in person.

2. Cooperating agents don't want to lose credibility with their buyers by showing them overpriced listings.  Good agents have a sense of value based on years of experience. An inflated price does not fool them into showing the property. 

3. Cooperating agents know from experience that market priced offers on overpriced listings frequently are rejected. After all, there is some reason that the seller is sticking to the inflated price - like an unreasonable belief in the property's value. 

4. Many buyers are embarassed to make offers considerably below the list price.  After all, how do they know that the seller is expecting that.

5.  The property may become over exposed and shopworn. Buyers and cooperating realtors begin to assume there is something wrong with the property and do not put it on their lists.

6. Even later price reductions do not regain the lost market. Many qualified buyers who go to overpriced listings eliminate them then and forever forward. It doesn't matter what the new price is. The buyer has moved on. 

7. When certain buyers see that a property has been on the market for a long while, they are motivated to make an offer - and it will be low, very, very low. 

How to solve this problem

Simple - listen to your realtor and price it right the first time. Don't keep the price that you are willing to take a total secret cloaked in tens of thousands of dollars of excess list price. Instead, price your home at that price or close to it! Remember, a home is not like a fine bottle of wine - it does not get better the longer it sits on the shelf! 

If you have a home to sell in the DC metro area, then give the Lise Howe Group a call at 240-401-5577. If you want to sell your home for top dollar on your time frame, this is the call to make! 

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Rainer
62,118
John Owen
Right at Home Realty Inc., Brokerage - Oshawa, ON
Broker serving Durham Region, Ontario

Hi Lise, great post! Lots of rationale here for listing interviews.

Feb 11, 2014 04:01 AM #1
Rainmaker
1,180,833
David Spencer
Keller Williams Northland - Kansas City, MO
Show Me real estate in Kansas City

Good advice that produces results; however the seller usually listens to their own trumpet. Thirty five years taught me that.

Feb 11, 2014 06:09 AM #2
Rainmaker
845,099
Barbara Altieri
Kinard Realty Group Fairfield and New Haven County CT Real Estate - Shelton, CT
REALTOR-Fairfield County CT Homes/Condos For Sale

Lise -- I love the fine wine metaphor. That is certainly the truth!!

Feb 11, 2014 10:55 AM #3
Rainer
106,853
Rob Marken
Bend River Realty - Bend, OR
25+ years experience in Bend

Great points on why it is so important to have the correct list price.  Thanks for sharing.

Feb 12, 2014 12:10 AM #4
Rainmaker
803,867
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Lisa, every one of your points is very valid. It is our job as Realtors to try and help the home seller list their property for the right price. Sometimes it doesn't always work out that way, but now I can just use your post for ammunition.

Feb 12, 2014 09:18 AM #5
Rainer
28,127
Brian Park
Park Realty Investments - Murray, UT

The pricing game is not a constant. I have had buyers that I call price tag buyers. They have acquired the ask what you want for an item and if I don't like it I will just move on. Our society has more of these people then you think.

The seller by putting on the big cushion has lost a good buyer. My answer to a seller is it appears that the probable selling price for your home is going to be about $500k, now comes the part you have to decide, how many buyers do you want to scare away.

By increasing your price 1% you can scare away some buyers, and by increasing it by 2% you can scare away even more, the same with 3%. Now above 3% you can really progress and start chasing away almost everybody. You will finally reach a percentage where you end up with just a buyer or two wiling to try and beat you down to their figure or they will walk away, and they know there isn't a waiting list of buyers for your home at that point so they will try and get it for less then market and of course you didn't sign on to go through all this to sell for less then market. 

Of course there are other kinds of markets. Many years ago a San Francisco broker called me, we were old friends and asked me to look at his listing. So I looked at his listing and the Frisco market was hot hot. And I said it is listed to high, and he and the sellers about threw me out the door. I said now listen to what I am going to say, the Frisco market has average time on the market at about one week. Multiple offers and bidding wars, and said to my friend am I right or am I right. You have your home priced right at what seems to be the current market value. It was listed at $725K and I said I want you to put a new listing on the MLS for $625k  and told the sellers don't worry, you don't have to sell it for that, just try it for 2 weeks. Well, he re-listed on the MLS and 6 days later called me and said they had a deal at $825K. I call these auction effect markets and bidders get carried away and sellers developed big smiles.

Feb 12, 2014 12:55 PM #6
Rainmaker
1,182,245
Adrian Willanger
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience

Hi Lise, pricing a home, I feel, is perhaps one of our most important jobs as Realtors. You offer some really good information to sellers about the pitfalls of overpricing. 

Apr 04, 2014 01:50 AM #7
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Rainmaker
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Lise Howe

Assoc. Broker in DC, MD, VA and attorney in DC
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