The Price is Right
BY Scott Moore, REALTOR | March 3, 2022Setting the right list price for a home feels like a mystery for many sellers, especially when you can’t stop thinking “This was the biggest investment of my life and I need to make it count.”
The first step is to think about the ABCs:
A — Active listings —How many comparable homes to mine are actively for sale right now?
B – Buyers— Are there a lot of buyers in my area? How long are homes taking to sell?
C – Course of action—What strategies can I use to prepare, market, and close a deal on my home that will maximize my profits?
There are only three ways to receive offers on a home – an offer date, offers as received, or to withhold showings for 2-3 days while still an active listing to draw in interest. All three are great strategies to sell a home, but there’s no one-sized-fits-all winner. It is critical to get the advice of a realtor experienced in your local market to determine which strategy is right for your home based on the current market demands.
Once you have figured out the ABCs with your realtor, the next step is to discuss pricing.
The first thing to keep in mind is that the banking world tends to work in $25k increments. When a buyer gets a pre-approval from a bank or institution, usually it will be for $400k, $425k, $450k etc. Buyers then take this number to their realtor and set up home searches to start receiving all active listings within their budget.
Next, you need to avoid the two price “tipping points” that, if crossed, can cause you a lot of problems.
The low tipping point is a price that’s low enough that it makes buyers suspicious. If the price is too low, they wonder, “What is wrong with this place?” or conclude “They must be playing games with this price.” Essentially, if you price the home too low, buyers won’t take your listing seriously. Secondly, you may actually get an offer for that price! If you respond with a counteroffer for a price that is higher than what you listed, usually the buyer is annoyed or offended, and your counteroffer is unlikely to be accepted.
Pricing on the lower side is a strategy that can be useful to generate a higher eventual selling price, but this is very sensitive and requires a lot of expertise and up-to-the-minute market knowledge to ensure this strategy won’t backfire. You should never price your home at price that is lower than what you would accept.
The other tipping point is the high point, which is setting your price so high that buyers won’t take it seriously for different reasons. Either they think “These people are just out to lunch” or “There is no way they will accept an offer, no point trying.”
Pricing too high also really inhibits people from falling in love with the home, which is so critical to getting a high selling price. When buyers tour a home that is priced too high, they spend but the whole visit pointing out flaws and justifying why they price is off-base, rather than experiencing the home as it is, and trying to see themselves living there.
The end result if you cross the high tipping point is that you get fewer showings, and no offers.
So, what’s the right price to list your property? The answer lies somewhere in-between those two tipping points, which we calculate using the data that we gather from our study of the ABCs.
Real estate really is a science, and if maximizing your profits is top of mind for you, I can’t stress enough how important it is to give me a call us at 204-995-7355 so we can get it right.