Imagine you want to buy a gallon of milk. You eye the dairy case, shelves stocked with dozens of choices, but they are really all the same. Milk is milk, and which one you select is really insignificant because they are all identical, and they are all priced the same.
But what if each identical offering was priced differently? Odds are you have set aside ample time for your shopping trip, and you will carefully check the price labels and go for the best deal. Or maybe you are drawn to the more attractive packaging.
When selling your home, attractive pricing and packaging are arguably the two most basic essentials. In our current real estate market, the buyers have a lot of choices. In many areas, the shelves are simply overstocked. And since no two homes are the same, making that distinction between your home and the dozens of others is key.
Where pricing is concerned, establishing that all important asking price is part science and part art, and there are several things you should consider.
Study past sales. This is the starting point for any thoughtful and successful pricing strategy; think of it as the “science” part. Take the time to study past sale statistics for homes in your area and areas similar to yours. None will be identical, of course, but having a clear understanding of true market value is the first step in establishing your list price.
Do not confuse active listings with past sales. Active listings have not sold. They are just your competition. It is important to be aware of your competition’s pricing, but this is often just an indication of what your home won’t sell for.
Do not overprice because you have “time.” If the market is appreciating, this strategy may work, but if prices in your area are declining, you may quickly find yourself chasing a market and costing yourself money. And if the market is stable? Your home will just sit. Buyers pay in today’s dollars, and time is rarely on your side.
Leave some room for negotiation, but don’t overreach. No seller wants to feel he left money on the table, and no buyer wants to overpay. Your price should give both parties room to maneuver, but if it is too high, you risk being perceived as unrealistic, and buyers will pass over your home.
Think like a buyer. What are the things that you value in a home? Is it a large yard, an updated kitchen or a view? These are likely the same things that your buyer values as well. Talk to your agent about current buyer trends. Yesterday’s avocado green shag carpeting is today’s granite countertop. The property facing the interstate is going to be a tougher sell than the one with a mountain view. Your price should reflect how your home compares to the others offered for sale. Buyers will find objections to any home, as none is perfect, but it is curious how quickly objections disappear when the price is compelling.
React swiftly and decisively. If your home is on the market and is not being shown or if you receive feedback that you are priced too aggressively, don’t hesitate to adjust your price. Bad news, like spoiled milk, doesn’t get better with time.
First impressions are everything when selling your home. Studies have shown that the first two weeks on the market are the most crucial to your success. During these initial days, your home will be exposed to all active buyers. If your price is perceived as too high, you will quickly lose this initial audience and find yourself relying only on the trickle of new buyers entering the market each day. Markets are dynamic, and your price has an expiration date. You have one chance to grab attention. Make sure your pricing helps you stand out on the shelf — in a positive way.