Price Your House Correctly From the Beginning
Why? Well that question is one big reason to start with. You never want potential buyers to ask “Why?” when considering your house in their hunt.
Why is the price so high / low?
Why has this house been on the market so long?
Why has the house had such a big price reduction? Or so many price reductions?
See what I mean? With all the information available to buyers and a low inventory of houses to choose from right now, you don’t want yours to immediately fall to the bottom of buyer’s shopping lists. Worse yet, they may drop it off their list altogether.
Of course you want to get the most you can for your property. It is no accident that your Realtor’s incentives are structured to assist you in your goal! However, there are also good points for realistic and, GASP!, even pricing a teeny-tiny bit low.
There are real day to day costs in time and money in having your home sit on the market. The longer it sits there over-priced, the more costs you incur while frustration mounts. Just because your house went on the market doesn’t mean that your monthly upkeep and utility costs went away. Indeed, to get your home in the best condition for sale and marketing, you actually incur extra costs in putting your home on the market. This is one of the reasons I invest with my clients to assure them that I believe in my marketing approach so much, that I’ll put my own money behind it.
This study, Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes, shows that homes forced to reduce their price sell for less than similar homes that were priced correctly to begin with.
Price changes and homes sitting on the market for long periods of time lead to the dangerous “Why” questions listed above. You want buyers to come to your house and start speculating on who is going to get which bedroom or where their favorite chair is going to be positioned or whether the bonus room is going to be a home theater or a library. You don’t want them starting with negative questions and never get to see how great your property is to begin with.
Price your house too high for “negotiation room”? There’s disagreement on this topic as just this week I saw an article by another excellent agent who argued the opposite. However, I would argue that if you price for negotiation, you increase the likelihood that “Why” questions will block your ability to get any offers leading to negotiations. If there are no negotiations, then having room for them is pointless. I’d rather have “room for negotiations” because the property is priced attractively and thus there are multiple offers. Now that’s room for negotiating! Now there is an upward pressure on your sale price, not a downward pressure because you overpriced. Now buyers are adding money to the table vs. you taking money off the table!
Consequently, don’t get upset if your Realtor advises you to set a price below your expectations. Providing honest, accurate advice, even if it hurts is part of a professional agent’s job. Any ol’ agent can go with your recommendation just to get the listing. That approach doesn’t do you any favors. It likely will end up costing you time and money!
Read this article for why initial pricing is critical, why pricing for “negotiation room” works against you and how mispricing ultimately costs you money.