No matter what type of market you find yourself in when it comes time to sell your home, how you price your property can make or break your deal. Price too high and your home will sit. Price too low and you’ll likely see competing offers and people clamoring over your home. HINT: The latter scenario often results in a faster sale at or above the perceived market value. Of course, I am not saying that a seller should attempt to under price their property, but a strategy that involves pricing as close to the perceived market value as possible is usually the winning strategy.
Let’s back up for a moment though. What do I mean by “perceived market value?” Put simply, it’s the value that buyers and real estate professionals feel your home is worth, and they are determining this through a number of different factors. The real estate professional is using the comparable sales and area knowledge to make their determination. The buyers are using internet searches and comparing your home to the other “for sale” properties that are coming up on their search results. These buyers are the most important group for sellers to be focused upon. They spend hours searching and making lists of their favorite properties and your home will be going up against all the others that show up on each of the different websites. What they are specifically looking at when conducting searches is another blog topic in and of itself, but let’s just say that price is a major factor. Homes that are priced in their affordability range and fall within their upper and lower price limits will be viewed and compared. Homes that are felt to be priced too high are likely to be marked as “rejected” and kicked off the list. It’s unfortunate, but your online presence is critically important and you have about 30 seconds to sell buyers on your home before they move on. This is their “perceived market value.”
Just to illustrate what the studies have shown, the graphic below shows what happens to the number of potential buyers that will view your home when priced just small percentages above or below the market value. You can see the drastic effects it has in cutting down your opportunity to sell. What often results when you price too high, is few showings, no offers, and long market times. This eventually leads to the perception of a problem property, price cuts, and the potential that you will have to settle on a purchase price that is below the market value. Now, flip this around and understand the potential outcomes when your home is priced at the market value or slightly below. This increase in activity typically results in competition. When there is competition, there is the opportunity to drive the price up, and when the price is driven up, we often end up above the market value. Like anything, there are no guarantees, but the numbers don’t lie and seem to speak for themselves. Pricing right is what gets you the activity, and it’s the activity that will sell your home.
The bottom line is that that old thought process of “let’s just price high and see what happens” doesn’t work anymore. With the on-line searches, the buyers are in control of so much more and as a seller you are fighting to stay on their list. Buyers are savvy and if they don’t see the value, then they’re not going to come through your door and you’ll have little to know offers to work with. Eliminate that fear that you may be priced too low, understand that more foot traffic usually means more offers and competition, and price that home to sell….you won’t regret it!