One of the most important decisions that you need to make while preparing to sell your house is the price. This is an especially interesting process for business owners who are used to creating sophisticated pricing strategies for their products and services.
When listing a home there are typically three types of sellers among the business owners…
- Those who rely strictly on market data/proof.
- Those who want to reach for the sky but are also realistic with the possible need for quick adjustments.
- Those who just want to get a certain price and that is their only motivation.
Unfortunately, sometimes sellers make the mistake of overpricing and wind up sitting on the market for a long time. Once they end up with too much time on the market they end up having to cut more than if they would’ve listed at market value from the beginning. Time has a value and should be considered.
In our experience, the first two weeks on the market are the most important and most marketed weeks for the property.
If you underprice you can often get a quick sale – but that’s not a guarantee. Underpricing may alert other buyers of possible issues. You’d be amazed at the stories that can be created in a buyer’s mind. It could also show extreme motivation and if marketed right, could appeal to a buyer looking for a good deal.
Sometimes it doesn’t hurt to “push” upwards on price. We have set new records in neighborhoods because we knew the market and the value that could come even though the data did not reflect that pricing strategy…yet. If another agent talks a seller into listing low, doesn’t mean that you should list low. But you should know what “low” is. A factor to consider with this strategy is that appraisals are based on that “data” which can reduce your buyer pool for those willing to take the risk of not appraising.
The bottom line: You need to base your pricing on facts and data, not emotion. You need a market analysis.
Confidence. Information. Market knowledge.
Data indicates that if you price your home “right” you’ll spend fewer days on the market and you will generate the most activity. It also shows if you overprice that you will get less activity which means a smaller buyer pool – which could mean not as much exposure and therefore you miss out on potential offers. You could also under price and not be in the right market for the buyer of that home. Check out the pricing pyramid below and consider using this when deciding how to price your home to sell.
There’s a lot to consider when it comes to pricing, and there’s not a “one size fits all” solution. That’s why it’s so important to work with an agent who understands the data, knows how to interpret it, and knows how to develop the right pricing strategy for your specific situation. An agent cannot make the decisions for you but can give you the if/then scenarios and you can decide what works best for you.
Thinking of selling? It is a great idea to reach out and interview agents months in advance so that you can have the discussions about the market, what may need to be done to best present your home in the current market, and discuss effects of timing the market to sale your home based on your desired outcome. Ready to sell NOW? Consider looking for an agent that has a PSA – Pricing Strategy Advisor certification, if they don’t have a technical/analytical background to help you analyze the information.