When I work with a seller to determine the list price for her home, I usually give a range instead of a specific amount. It’s usually about a $10,000 range, although it can be larger in the $500K price point. Then I have a lengthy conversation with the seller to explain how I got this list price range, which homes I used as comps (and why), how an appraiser’s value might be different, and how long it’s currently taking to sell a home in this price range and in this community. We talk about the pros and cons of her home and the features that make her house stand out. How is her home similar to the ones currently for sale, and how is it better or less desirable? I find that it’s best to go ahead and talk about these topics because we’re going to revisit the discussion once we start getting showing feedback from buyers’ agents.
Then I ask my seller to choose the list price. Depending on her timing, she might go for the lower end of the range in order to get a quick sale. If her company is relocating her and she needs a quick move, this is a good choice. After all, the lower number on my range is still an aggressive price. I never want to see a seller lose money, especially in a market like ours where prices are going up at a record rate.
If she has several months before she needs to move, she might choose a number at the higher end of the range. This way, there’s no question in her mind later that we tried to get as much money for her home as possible. We try the highest amount possible, knowing that we can always reduce the price if we’re not getting the showings or offers we need. If we end up needing to have price reductions, I generally do these in increments of $1,000 per week so that any buyers registered in our MLS will be notified if the home meets their criteria.
What happens if a seller wants to list her home at a much higher price than the range I suggested? If it’s just a small discrepancy, I’ll probably list the home anyway. However, in the past year I’ve noticed that some sellers get stuck on an exorbitant Zestimate, or perhaps a divorce or previous refi means that they desperately need to get more money from the sale of their house than the market will yield.
Based on my 14+ years of experience selling Charleston real estate, there is no way to convince a seller of the fair market value if she has an unrealistic (higher) price in mind. A Realtor can create the most accurate CMA (comparative market analysis) possible, but no statistics will convince the seller of a realistic price.
In these cases, I usually decline the listing. There are plenty of other agents out there who are so desperate for business that they’ll take any listing at any price. However, with the amount of time and out-of-pocket cost I put into each listing, I don’t want to take on a listing that won’t sell.
The irony is that every time this has happened in the past year, I’ve seen that the home eventually sells for very close to the amount that I suggested. However, it took the seller (and her agent) many price reductions and contract negotiations to get that $30K or $40K off the initial list price. And each time this has happened, I’ve been glad that I didn’t take the listing.
Other Realtors in my office often ask my advice when they’re preparing for a listing. What should the list price be? Do you think that’s too much? Could we get more? Do you know of any upcoming listings that would compete in this neighborhood? What is your home pricing strategy? I get a lot of these questions weekly, so I wanted to explain how I price a home based on my experience.