Top Two Most Common Pricing Mistakes!
Its a early Sunday morning, you wake up, and look forward to your yummy breakfast of cereal and almond milk (I don’t like dairy milk) and you sit down pour your cereal, measure out your portions and dig in. Yuck! The almond milk has expired! Its a terrible experience.
When a seller’s home listing expires it can be a similar experience. It’s like pouring money down the drain. For both the seller and the agent. In most cases an agent will spend hundreds, maybe thousands on marketing a listing only to have it sit and eventually expire. How can can we avoid this? Well, as I research my weekly expired’s I often wonder what the causes are of a listed home becoming expired. Real Estate agents are in the business to help people sell and purchase homes, that’s their job. If you’re an agent, you know that getting listings is generally where you want to focus your attention. However getting the listing is half the battle, selling it and having a satisfied seller is the other. It doesn’t help your bottom line to have 5 listings and 4 of them go into the expired category because it didn’t sell. There are lot’s of reasons that a listing would expire however pricing seems to be the biggest cause. As I scour the internet for information I have found the top two most common pricing mistakes that will lead your listing to doom.
1. Pricing the home to high from the gate. This is all to common, as a seller you have a lot of pride and energy that goes into keeping up with your home so when you get to the point where you are ready to move on you only want the best possible price. And you are right to feel that way, however when placing your home on the market, it’s the market that really dictates the price. So many variables come into play but the bottom line is something is only worth what someone is willing to pay for it. I once sold a book for $4,000…a book. But it was the right time and it was worth it to that person at that time. (it was the first copy of the first edition, signed by the author) Point is, you need to utilize the service of a knowledgable agent that will do their due diligence in researching pricing in your area. This would be done by preparing a comparative market analysis and really focusing on homes similar to yours that have sold in the past 3-6 months. I believe sold’s are the true sign of what someone will pay. A home can be currently listed for whatever, but the truth is in what it actually sells for.
2. Using random list prices. This one was most interesting to me. You see odd pricing all over the place, $97, $997, $1447 etc.. I believe there is research behind this type of pricing that makes people buy. The problem with pricing your home this way is that al though you may think it looks cheaper; $376,650 looks better than $380,000. Problem is when agents, or even buyers are looking for homes in a price range your listing can miss being included in that search by a couple thousand or even a couple hundred dollars. So let’s say a buyer is looking to purchase a home between $320,000 and $400,000. If your home is listing at $319,500 or $405,000 you miss that buyer. To think that if you just upped your price by $500 you could show up in that buyers search. It’s crazy to miss a potential buyer or agent finding your home because of a weird pricing tactic. Keep your pricing simple and make it searchable for agents and their buyers.
Being in the business for the past 8 years and starting my career as an assistant/ transaction coordinator I have seen a ton of different ideas and tactics that agents use to price homes. Honestly, the homes that have sold the quickest are ones that are marketed well, have been certified pre-owned and priced just right. If you’re a seller, I strongly encourage you to do your research and find that agent that understands how to price a home. If you’re an agent do your due diligence for your seller and be firm. If they aren’t willing to listen or be coachable when it comes to pricing its better to walk away from the listing. Because a listing that goes expired due to bad pricing strategies, doesn’t help your seller and doesn’t help you.