The Importance of Accurate Pricing
Tuesday Dec 04th, 2018
In a previous post, we talked about how to figure out what your home is worth. This post is not about that. This post is about what to do with that information once you have it. For some it is obvious what to do: pick an asking price according to what my home is worth. If you count yourself among that cohort, read no further. If however, you'd be inclined to ask for more than market price for the off chacnce that someone might pay it, read on dear friend, this is for you.
For many, the idea that you can get more by asking for less is grotesque. "How can it be?" I hear you asking. If I don't ask for more money, I won't get it. And generally, that's true. The piece you're missing is that all the data shows asking for too much will result in getting too little. That is to say; the best way to get the most money in your pocket in a repeatable, reliable way, is to price your home accurately. Full Stop. Pricing a home too high is a great way to ensure that your target audience either won't see it, or if they do, won't book a showing. Even at fair market value, you'll only capture the attention of about 60% of eligible buyers in your area. That's because the other half are either looking for a different style of home, or in different neighborhoods. Overpricing by as little as 10% will cut that already limited audience in half. Don't make that mistake.
"Let's just try it for a couple of weeks to see what happens. We might get lucky." Nope. That doesn't work. The majority of interest on a property and consequently the greatest concentration of showings occurs in the first two weeks on the market. The day the property hits the market, anyone with a search filter set up will get an alert that the property is available for sale. If you price it accurately, there’s a huge number of people who are likely to book a showing. If you’re overpriced by just $10k in a competitive market, they either won't see it or will opt for the house down the street that didn't get greedy.
If we miss the initial window of interest, the property will sit on the market for longer. This is a signal to buyers that there is something undesirable about the property. If it were desirable, it would have sold, right? So the property becomes stigmatized and then the frugal buyers come out of the woodwork to try and get a deal. The longer the property sits, the further below market price it is likely to sell for.
So it is clearly imperative to price accurately. How do we know what an accurate price is? We covered this topic in-depth in another post but the gist of it is that we take a data-driven approach based on past, present, and future market conditions. We look at recent sales of similar properties in your neighborhood and in your town. We also look at the history of sales on a longer time frame and analyze the market trends - are prices rising or falling? What factors might influence the sale price if your property were to sit on the market for a month or two?
Equally important is analyzing present competition - what can buyers get for the price you’re asking for. If there are more desirable properties at the same price, you won’t sell.
If you’re wondering what your property is worth, get in touch today for your free market evaluation. It only takes an hour and it gives you the knowledge necessary to maximize your sale price.