Hi there. Today I feel inclined to write about one of my pet peeves. OK it's not colored post titles, how to blog, signature spam in comments or any of those "hot" topics. It's actually about real estate and pricing.
I've been an exclusive listing Broker for 13 years, in my market, Poinciana Fl, and pricing properties correctly is my expertise. There's not too much I'm good at in life but when it comes to pricing, listing and getting homes sold, I'm an expert. My success is simple, price it right and sell it. To me, nothing is as important as pricing. It will overcome market conditions, location and property condition. The reality is there are only two things that we have control over, property condition and pricing. So you have to get them right.
In my market, values are declining and they are declining rapidly. A property that was priced correctly 60 days ago may now very well be overpriced. So it is imperative that we set the right figure from day one in order for the Seller to maximize their selling price. And we have to continue to monitor the market and make adjustments when necessary.
So how do you arrive at the right price? Well, I'm fortunate that most of the homes in Poinciana are very similar. When I'm looking at recent sales it gives me a real good picture of what similar homes are selling for. Also, by arranging recent sales in order of most recent and factoring in pendings it will show me the current trend. If the most recent sales were at $195,000, $197,000, $200,000 and $205,000 then it is very easy to see a declining market. If the current pendings are also in the lower range them I need to price my listing in the lower range. Maybe $195,000. The other thing I must look at is what's on the market. If there are 50 other similar (age and sq ft) properties on the market, from say $189,000 to $229,000, I need to factor that in as well. Pricing is not an exact science but is an acquired skill.
My goal is to always have my listings in the top 10 (lowest priced) when another REALTOR® is doing a MLS search. I achieve this by Range Pricing. In the example above, if I knew market value was around $195,000, I would Range Price the property from $189,000 to $199,000, using $189,000 as the list price. What I have now done is put my listing in the number one position of similar properties. This means it will get shown more often and assuming the property condition is correct it will sell. And will usually sell close to $195,000. If I had priced it at $199,000 hoping to sell at $195,000 it would have moved it up to the middle of the list and would not be shown as often, if at all. Now, I know Range Pricing is controversial and is not doable in all markets, I'm just using this as an example of how I price.
The point is to make sure your listings are positioned aggressively, in the MLS, so that they get shown. If you make a mistake on pricing it's better to be too low than too high. A listing priced too low will usually adjust itself by multiple offers and negotiations. If it's too high, it will just sit. And the problem with that is that when you do finally get a price reduction the market value may have decreased even more. Then you end up chasing the market downward but never quite catching up. Sellers need to know this.
As REALTORS® it is our job and obligation to be brutally honest when it comes to pricing. The quickest way to fail, as a listing Broker, is too take listings that you cannot sell. It's important for Sellers to know that REALTORS® and Sellers do not set market value, the market does. And the market is what it is. We can't just miraculously sell a house for 10% more than market value because we are expert marketers or because that's how much the Seller feels his house it worth. It ain't going to happen. To take a listing that is grossly over priced is nothing more than a waste of time, money and effort. So don't do it. Give the Seller the facts. If they are not in agreement or can't sell because of too much of a mortgage or whatever, then it's best to walk away. Here are some good phrases you can use to get your point across. Some are mine and some I've taken from others.
- "I would rather turn you down now than let you down later."
- "The market is what it is."
- "It's not your house, it's the market, and the market says this is the value."
- "I'm not willing to finance your fantasy." (Laurie Manny)
- "I'm sorry, I can not sell your house at that price. I would be lying to you if I said I could."
- And my favorite.....NEXT!
That's it, Broker Bryant's crash course on pricing. This is very basic and I'm sure you have thoughts you can add. What are they?
**Picture courtesy of Nick "Duh" Appraiser. Sorry, I had to use it!!!