Pricing Your Home for Sale
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Correctly Pricing Your Home
To get the best price for your home, it is IMPERATIVE to understand the importance of correctly pricing your listing. You will be approached by many Realtors who will try to “buy” your listing, by promising they can sell it for HIGHER Price. I will explain here why that tactic will cost you money. An experienced agent knows how to price a home, defend that price, and get you top dollar in the least amount of time.
The PERFECT Buyer To illustrate this concept, see yourself as a buyer for a moment. You find the PERFECT house, but procrastinate, ask around, look around, wonder “is this the lowest price? Should I look more? I don’t want to make a mistake…” and BAM, it’s sold out from under you. When this happens TWICE, as it has been over the last few years in markets across the country, you are what us professionals call a “Hoverer.” or the “perfect buyer.” You are the most motivated buyer, you know what you want, and you know you are not the only one wanting it. You are also the most likely to make it to the finish line of closing escrow.
Pricing a home with “Room to Negotiate” BAD IDEA. This belief can cost sellers money. A new home on the market gets the most activity in the first 30 days. If the home is overpriced it will sit. The longer it sits, the less it attracts buyers. As it sits, it costs the Seller money.
Pricing a home high “at first” with the intention of dropping the price later “if it doesn’t sell.” BAD IDEA. Those “hoverers” know what the home they want is worth. They are combing through new listings, ready to pounce and buy quickly. These buyers are looking for NEW listings , and your price reduction after the “Cumulative Days on Market” are no longer new, and you will not make it to the perfect buyer’s radar.
The Best Price. It is the ‘competition’ between these motivated, ready, willing and able “perfect buyers” that drives the price and shortens the marketing time of a listing. By contrast, I often remind sellers that the first question potential buyers ask us when showing a home is ‘how long has it been on the market’? The clear message is that we want to avoid this suffrage of perceived value. YOU CAN NEVER REGAIN THOSE “LOST” FIRST DAYS ON MARKET! Competitively positioned homes sell faster and for more money.
Paradise Valley – Scottsdale Market Study
Case Study. Robert Rothstein, a teacher of market dynamics holding several patents in market indexing, did a study on the local Phoenix Metro market in 2014 as follow up to a previous one in Seattle. He targeted the luxury market in Scottsdale and Paradise Valley using homes sold in the range of $790,000 ‐ $2,000,000 over 3 months (equivalent to the same homes today which have appreciated on average to $1,700,000 – $3,000,000). The Results: Homes that sold for the highest square footage, also sold in the shortest amount of time, and sold for 100% of the original asking price!
In this Rothstein study, ‘Quartiles’ refer to dividing the 877 sales roughly into quarters. So the 1st quartile represents just over 200 properties (a statistically significant sample). The first chart sorts by sale price as a percentage of original list price. The second sorts the data by days on market (DOM). The results are not only inline with our proposition that homes sell more quickly and for more money when priced competitively, the results are robust and compelling.
Note: You might expect results like this in the lower price ranges where there are shorter marketing times and higher demand. So targeting the luxury sector provides further credence to the efficacy of the importance of pricing your home correctly from day one. “Competitive Positioning.” Also note that property sales over $2M ($3M today) were intentionally excluded, as they represented only about 15% of the market and involve many other extraneous factors.
About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro Phoenix Valley. To request a printed market report, home evaluation, consumer guide, or info on your specific market, contact Denise at 602.980.0737 or email Denise@AZMultipleListingService.com. Denise’s husband Patrick is President of Realty Executives International, so if you need help buying or selling homes anywhere in the U.S. or Canada, please call, email or text!
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