Your Home’s Position in the Marketplace
Where does your home fit in the current real estate market? Is it priced to sell or priced to sit on the market and eventually expire. In any given market, only a specific number of homes can sell in a period of time. In order to get your home sold in that period of time, it must be positioned competitively in price, condition, and terms. Price is the most strategic and flexible of these factors.
There are many dangers to overpricing a listing but for sure overpricing lengthens marketing time and invariably results in a lower selling price than would have otherwise been obtained. Since an appraisal is usually required in financing a property, it is pointless to price a property for more than it is worth in the current market because the recent sold listings in the neighborhood will not support the price. Repositioning your home to compete can include adjusting the price, condition or marketing of the property to better align it with its competition in the marketplace.
Buyers make their decisions based on competitive shopping and are generally more aware of actual market conditions than sellers because they are out actively surveying what is available in a particular area and price range. One of the most difficult tasks for a seller is to objectively evaluate the value of their property because they have an emotional bias to the home. As a seller, you are placing your home on the market as a product for sale to the current pool of buyers looking for homes.
Fact – Positioning Attracts the Greatest Number of Buyers
If a home is priced at market value, it will attract a little over half of the prospective buyers in that market. Not all will be interested in the home because it won’t be the right style, size, location or number of other reasons.
If the price is 10% lower than market value, more people will be interested because it is a good value. They will be willing to make concessions in amenities for price. If the price is 15% lower than market value, almost all of the potential buyers will consider it. They know values and must be willing to pay a premium for the benefit of getting the home that most precisely meets their needs.
Following the same line of reasoning, if the home is priced at 15% above market value, it will eliminate the vast majority of potential buyer. It is not to say that the home won’t sell but it will certainly extend the market time.
The question facing sellers every day when they price their home is “What percentage of the potential buyers do you want to appeal to?”
On strategy would be to price the home in today’s market so that it will sell with 30 to 60 days. Experience has taught the industry that if a home sells in the first 30 days that it is on the market, it will unusually sell for its highest price.
An explanation of this is that there are potential buyers in the market who have seen everything that is for sale currently and are waiting for something new to come on the market. They rush to see the home immediately and these seasoned buyers can tell if it compares to other homes in price, location, condition, and terms. They also know they might be competing with other buyers and have a tendency to make their best offer first.
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