I would say that pricing is by far the single most important aspect of the overall marketing effort of selling real estate. You cannot afford to get this part of the process wrong, believe me. The sad thing is that so many people do, as they simply do not understand full all of the repercussions of improperly pricing their home.
Sellers want to get as much money for their homes as they possibly can, and can anyone blame them? Yet it is this very notion that gets so many sellers into trouble. In an effort to maximize their return on their investment, they often get overzealous and price the home too high for the current market conditions and figure that they can always lower the price later as needed. At first thought, this approach seems to make perfect sense and even seems to be a very logical and practical way of proceeding. Let me explain, however, precisely why this qualifies as a flawed technique and why this approach will end up costing you more money – sometimes thousands more in the long run!
This strategy is flawed because it does not take into account what buyers are thinking or what the buyer’s perspectives are. This is often the problem – so many sellers do not try to look at the situation objectively and from the buyer’s point of view. Once you price your property and introduce it to the buying public with a price point that is too high, you have lost out on the single most important and powerful opportunity that you will have in the entire sales effort — that is the first two weeks of the listing. This period of introduction is so very important because any buyer who has been looking for any length of time and who has not decided on a particular house yet, is on the lookout for new listings.
New listings hold promise, and excitement for buyers. If your home is priced properly, and is presented with high quality, flattering photos, and a professionally written description that effectively uses industry buzzwords, you will experience multiple showings and will likely get an offer within the first 30 days. If, however, your presentation is lacking any of these things, you will have problems, and pricing is the single most important component here. If your house is priced out of the market,buyers will write it off in their minds. Many sellers think that a buyer will look at the house, and fall in love with the kitchen, the lay out, or the upgrades, they will “see the light” and step forward with an offer. Unfortunately, it just doesn’t work that way.
Many sellers fail to realize that a home cannot sell if there are no showings. If the house is overpriced, there will be no showings and no opportunity for a buyer to fall in love with your home’s unique characteristics. The buyer will not bother to walk through the door of an over priced home….trust me. Your house will sit on the market with much less showings than it should have.
It gets worse. The thing is, there is yet another force here working against the seller, and that is time. The longer any home is on the market, the fewer and fewer showings there are. This is the death knell of the marketing effort and means that you missed the mark when you initially priced the home. But, how do you know if the home is overpriced? Well, if there have not been 10 showings in the first two weeks, then you are overpriced. Conversely, if you have more than 10 showings without an offer, there is likely some other problem such as appearance or presentation.
What can you do once you realize your home is over priced? Well, you have to reduce the asking price of course. But here is the clincher – Once your house has been on the market for a while with insufficient showing activity, you must make a significant price reduction to snap buyers to attention or else no one will even notice. I have seen this hundreds of times. A seller will insist on pricing a house too high, then after two months of lousy activity, they will reduce the price, but only by $500, or $1,500 on a $250,000 house! This will do nothing for you! No one will bother to notice. To get people’s attention, you will need to slash your asking price, and I mean slash it! $20,000 or more knocked off the asking price on a home in this price range should do it.
This brings me to the final and perhaps most important point. If you price the property properly in the first place, you will save money in two ways. First of all, your home will ultimatelysell for less if you price it too high in the beginning — the data is strong on this. In other words, you will end up at a lower number if you are in the position of having to get the buying public’s attention on your over priced house. People are naturally more tuned to new listings and this is where their attention is focused. This is why you only have one shot to get it right because your house will not be a new listing for very long. The same house that a buyer might pay $250,000 for many only get $200,000 after sitting on the market for 4 months as an over priced listing. That is a huge difference! If the property was priced correctly in the first place, say maybe at $225,000, it might sell for $210,000 30 days later — a net gain of $10,000 for the seller!
Another obvious expense is the increased holding costs associated with an over priced listing. If you over price a home in an effort to get as much money up front as you can, you will likely ultimately get less money, and in addition, will likely have to pay several more months of your mortgage payment. You have to look at the big picture here. Selling a home does not have to be a negative experience, you simply need the right guidance, and an agent who is capable of putting together a marketing plan that will strategically position your home in the market place for maximum effect. Call me today for more information. (904) 382.7695
