Pricing Strategies – Part II

Let’s pick up where we left off and discuss a few more strategies involved with selecting a price for your home:

1) Pricing low.  When is it appropriate?  Yes, it is possible to price too low, although I’ve met multiple agents who would argue against that.  To clarify, let’s say that all recent comps point to your home selling at $775,000.  You are wondering if you should price it at $799,000 and leave room for negotiation, or if you should price at $750,000 and get multiple offers.  Ask yourself the following questions:

     a) Is my competition priced high? 

     b) Are there a good number of pending sales relative to active listings in this price range?

     c) Are the current pending sales selling in under 3 weeks?

If your answer to all of these is ‘yes,’ then it is probably safe to list at $775,000.  After doing so, if you wait a few weeks, get a good number of showings, and then receive an offer at $770,000, you will know that your home was actually priced at value, not under value like you thought.  If it had really been priced low, you would have seen a much different response.

2) Positioning yourself against the competition.  It is always important to look at your current competition when you are pricing a home.  I like to go see properties, since it is hard to tell anything about a home from the photos online.  Once you are familiar with the quality of the competition, you need to see how long they’ve been on the market and if they have had any price reductions already.  Talk to the listing agents of each home and see if there is currently any interest on each home and if they are getting showings.  With all this knowledge, you can write in the “actual” price that each will probably sell for.  (Many might be over priced, a few might be priced low).  Use these numbers, NOT their list price, as comparisons and benchmarks when pricing your home and you will get much better results.

3) Timing based on neighborhood competition.  This is a very tricky subject. On several occasions I have had my Sellers inform me that another house on their street, or in their neighborhood is about to go on the market.  They want to know whether they should wait to list their house until after that home goes on, or if they should beat them to the punch.  It’s hard to prevent a neighbor’s listing from affecting your home sale in some way.  If you list first, they may come on the market right after you and price just a hair lower than you.  If this happens, I would advise you NOT to do a quick price reduction because this will seem desperate.  Most buyers will still come see your home, especially if it looks good in the photos and is fairly similar in price. 

On the other hand, the other house might come on the market first and sell right away, leading you to wonder if you should have acted more quickly while the buyers were hot.  Or, worse, they might price way too low for the neighborhood and affect your ability to sell at a higher price.

I think the best thing to do is see if there is any way you or your agent can find out how much they intend to list for, and what condition the home is in.  With this knowledge, you can decide if it’s even worth worrying over.  Perhaps you can convince them to list higher! Most of the time, I have found it is best to take your time getting the house to “show quality” with all your marketing done beautifully.  You will almost always have competition, so just try to make sure your home looks just as good or better than the rest!