When you sell a house, you want to “sell high” to someone who hopes to “buy low.” In the current real estate market, buyers expects bargains and may pass buying “perfect” houses in favor of ones with lower prices if they perceive the value is the same. Pricing correctly and coming to terms with “how low will you go” are important strategies when selling houses. You need a pricing strategy to guide you on how and when to change the asking price. How low will you go, and when?
Many homeowners over-value their homes because they try and factor in much more than area comps (comparable home prices). What they paid, money they’ve put into the home, and emotional investment in the home color the asking price. Real estate agents often face an uphill battle when encouraging owners to price according to the current market. Correct pricing helps sell houses faster.
Sometimes owners say, “Let’s price it higher to see if it sells.” This can be a risky game. The longer the home is on the market and the more often it is marked down, the more people question why it has been sitting and why the price keeps declining. Repricing the home too soon or too often gives off signals that the seller is playing with the price and might be willing to go even lower.
The pricing strategy is akin to the 99 cent pricing in the store. Just as consumers perceive they are getting a better price at 99 cents vs. $1.00, home buyers on a budget may be more willing to look at a home priced at $199,999 rather than $200,000. Though it is only a dollar difference, buyers whose up upper range is just shy of $200K would look at the one home and disregard the other as “out of their range.”
Even with realistic pricing, a seller should have high, medium, and low price points based on the market, not on what the seller paid for it or what is owed on the loan. According to Realtor.com, after the initial price has been set, you should have a couple open houses and gauge the traffic. Following a couple of open houses or a dozen showings without an offer, consider reducing the price in a month, or a bit sooner if you are short on time.
No seller wants to “give their home away”, but if you want to sell your home, you have to look at the consequences of not pricing it right in the first place, and then not lowering the price when it is not moving.
Would you sell your home at a loss if the market price was below your loan value?
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