Basic Principles of Pricing
2009/11/22 Originally published in the Vernon Morning Star.
When listing your home or property, it is critical in all but the hottest of markets, to ask the right price. The first thing to consider is what prices have recently been obtained in your area or in areas of equivalent value, on homes/properties similar to yours. This is when a knowledgeable Realtor® is your best ally. Many times your Realtor® has toured or shown the properties they use in their analysis. Realtors® know how to adjust for critical pricing differences like lake views vs. view, or view vs. non-view. Garage vs. carport, finished basement vs. unfinished basement, hardwood vs. carpet, dated vs. up-to-date and so on. This list is a long one, but I am sure you understand the concept.
Realtors® can also evaluate the accuracy of the sold data. By that, I am referring to their ability to know if a property was priced under value, or if there were two or three buyers competing on the purchase which would likely have driven the price upward. They often know if there was a Seller who sold too low because there was particular motivation to sell. They may know if a property had some particular unique feature that "certain" Buyers would pay more for than an average buyer.
To get the price right, accept that you must meet or beat the competition. Don't kid yourself. Expecting buyers to make an offer on an overpriced listing will only end in a Seller's disappointment. When Buyers go out looking at property they make a shortlist of properties they like enough to consider. When they see one they like, and it's overpriced, it seldom if ever, makes it to their shortlist. The reason is simple. No one wants to spend more than they have to. Remember, these purchases are usually made with hard earned dollars. Buyers automatically migrate towards the listings that are delivering the best value.
The next factor is how quickly you need or want to sell. Faster sales require discounted prices. Perhaps only a two or three percent lower price will make the difference between a good listing and a great one. If Buyers can see it's a great deal, they will make the offer with little hesitation.
Also, assess the competition. Are there a lot of properties similar to yours currently on the market? If supply exceeds demand, prices need to be lower. If demand is high and the inventory of listings is low then the opposite is true.
Don't be concerned if you have to lower your price to meet current market conditions. If you buy on the same market you sold on, you presumably will also be buying at a lower price. You'd be none the worse off.
A policy when pricing your property to sell, is to put yourself in the Buyer's shoes. Look at your price through the Buyer's eyes. It will help you keep focus on how very important the right asking price is.
Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email or call 503-3755.
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