There are three primary pricing strategies we use when we list your home:
- Price above market value
- Price at fair market value
- Price below market value
Price Above Market Value
Say we push the envelope on price and list your home above market value, what will
happen?
The pros are that you may just find that perfect buyer and set a new value for your
home and the neighborhood. However, this is not a likely scenario.
What’s more likely is a situation that would fall under the “cons” category of pricing
your home above market value. More often than not, this strategy will have you
headed towards too much time on the market and/or an expired listing.
To sell your home, you need to attract the attention of not only buyers, but the agents
who represent those buyers. Oftentimes when a home is overpriced, agents won’t
even mention it to their clients. They will know that it’s overpriced and not waste their
or their client’s time showing it.
In today’s market, where everyone begins their home search online and sets price
filter preferences, there’s a chance that your overpriced home will be missed by
realistic buyers. My job is to be open and honest and keep the end goal in mind –
selling your home for the best price in the quickest manner.
If you were a buyer and came across a home that was overpriced, naturally you’d
think to yourself, “why?” And then you’d wonder if it was worth your or your agent’s
time to find out the answer to that question. Don’t make it more difficult for buyers to
find your home.
Let’s say you do find a buyer for your home that’s priced above market value. In order
for them to obtain a mortgage, the home will need an appraisal and appraisers often
look at the comparable homes in the neighborhood to determine value. If the
appraiser does not feel the home is worth what the buyer has offered, this can cause
financial problems for the buyer and the sale will most likely fall through.
Price at Market Value
Just like there are pros and cons for pricing your home above market value, there are
pros and cons for pricing it at fair market value.
Certainly you want to get the most money for your home as possible, so it can be
appealing to price over market value. But like the previous page explained, that’s not
always the best idea.
Pricing at fair market value gives you an advantage in the following areas:
Exposure Online
With buyers today starting their home searches online, the first bit of criteria they
typically enter is price. Every buyer is looking to get the most for their money, but
there’s a range in which they’re looking. By pricing at market value you increase your
chances of showing up right in front of a buyer who can feasibly afford your home.
Appealing to other agents
When other agents who represent buyers see your home listed at a fair market value
price, they will be more motivated to bring their buyers to look at it if it meets their
criteria. It won’t leave them wondering why the home is over or under priced.
Easy Appraisal
Pricing your home at fair market value makes the appraisal process go smoother
and doesn’t hold up your buyer getting their mortgage. Being realistic with the value
of your home can lend to a smoother transaction all around.
The downside of pricing your home at fair market value depends on how you look at
it. Certainly, there is a chance you could potentially be leaving money on the table,
but that’s what negotiating the transaction is all about.
What do you see as some ‘cons’ for pricing your home at fair market value?
My job is to help you get the most money for your home in the quickest amount of
time. Now there’s still one more pricing strategy to discuss before we come to a
conclusion on what price to list your home for.
Now there’s still one more pricing strategy to discuss before we come to a
conclusion on what price to list your home for.
Price Below Market Value
Pricing your home below fair market value does not necessarily mean that it will sell
below fair market value. When you price your home lower, you can often times create
a frenzy among buyers and create competition, driving up the price.
Have you ever watched an auction? It’s like that, where everyone wants to acquire
the home for a bargain, but the demand and attention it gets from other buyers
increases the resulting sale price.
This pricing strategy only works well in certain markets. Depending on the nature of
your market, your real estate agent can help you determine if this approach is right
for you.
Traditionally, this strategy works the best in moderate to high inventory markets. In a
market with low inventory when most listings are getting multiple offers, this
approach might not be ideal.
So if pricing your home below market value is right for you, here are a few pros and
cons to understand first:
Pros
• Creates a frenzy and attracts more buyers and multiple offers
• Quick on market time frame
• Final sale likely to be over asking price
Cons
• Buyers bidding on the lower number may not be qualified or capable of getting
financing for the actual/intended sale price
• Not enough demand could result in a sale lower than market value
• Might not attract the right buyer
Your best chance of selling your home is in the first two weeks of marketing. Your home is fresh and exciting to buyers
and to their agents.
With a sign in the yard, full description and photos in the local Multiple Listing Service, distribution across the Internet,
open houses, broker’s caravan, ads, and email blasts to your listing agent’s buyers, your home will get the greatest flurry of
attention and interest in the first two weeks.
If you don’t get many showings or offers, you’ve probably overpriced your home, and it’s not comparing well to the
competition. Since you can’t change the location, you’ll have to either improve the home’s condition or lower the price.
Consult with your agent and ask for feedback. Perhaps you can do a little more to spruce up your home’s curb appeal, or
perhaps stage the interior to better advantage.
The market can always change its mind and give your home another chance, but by then you’ve lost precious time and
perhaps allowed a stigma to cloud your home’s value.
Intelligent pricing isn’t about getting the most for your home – it’s about getting your home sold quickly at fair market
value.