Robbie has asked me to look at creating a consumer video about pricing. It would be something Help-U-Sell brokers and agents could use to emphasize the importance of proper pricing and to describe the process. I started reworking the script I used for the longer broker/agent training piece we did for Help-U-Sell Pro-Coach Univeristy and have shared what I have done so far below. Please take a look and give me some pointers. Bearing in mind that we want to be a brief as possible, what other things ought to be included in such a video? Is the price trend information too complex for public consumption? Your help is appreciated!
Pricing to Sell
I’ll let you in on a little secret: pricing is the single most important thing you’ll do to ensure the salability of your home. All the marketing in the world can’t cause an overpriced home to sell. An army of top salespeople can’t cause an overpriced listing to sell. Overpricing means your home sits and sits until either the market catches up to it or you reduce it back to where it should have been from the start. Unfortunately, if you start out too high, you’ll miss the most important marketing period for your home. Here’s why.
At any given time, there are a certain number of people looking for a home like yours in a neighborhood like the one in which your home is located. Let’s call them your ‘Best Buyers’ – these are the ones who will recognize the value of what you have and will be willing and able to pay top dollar for it. It might be a few people or dozens of them. The moment your property hits the market you have the opportunity to be in front of the largest number of these ‘Best Buyers’ you will have during the course of the listing. Yes, more will trickle in as time goes by, but the initial weeks of your time on the market present the greatest opportunity to reach that larger pool of buyers who are already looking.
Now think about those people out there looking for a house just like yours. They’ve already looked at dozens, even hundreds of houses on paper and they are probably a little tired of the process. What they want to do when they look at new listings (like yours) is to quickly narrow the field, eliminate anything that does not meet their basic needs, and then investigate the few that might work for them. This narrowing and eliminating process usually involves three things:
- Location – is the house in an area they’d consider
- Beds and Baths – are there enough
- Price – is it within a range they would consider
If any one of these three items does not match the buyers criteria, the home is eliminated from the list of possibles. Now you can’t do anything about the location and the number of bedrooms and bathrooms is pretty well set. The one thing you can control is price. And you want to hit the market with a price that is within the range of market value so that you end up on the list of possibles for the largest number of ‘Best Buyers’ who are in the market at that moment.
There are three things to consider when setting a price: the price of similar properties in the area that have recently sold, the trend in prices, and the current competition. The data is readily available, however, you are wise to rely on the information provided by your Help-U-Sell broker. What’s available to the general public is often confusing and sometimes inaccurate. We use the most up-to-date and accurate database in existence.
Sometimes, there are enough sales of similar properties in the previous six months to give an indication of value. At other times, we may have to look back a little further. But it is always important to remember that you are looking back in time at prices.
For example, assume you have a comparable property that sold six weeks ago. That’s the date the sale closed. The actual date the buyer and seller agreed on a price was probably earlier – at least a month and most often two months or more earlier. So when you look at comparable sales, remember that you are looking back in time three to twelve months. To arrive at a proper price for today you must anticipate and adjust for the trend in prices.
Are prices rising in your neighborhood? How much? How rapidly? Or are they declining? And how does this information factor into your decision about pricing? If prices are rising rapidly and you base your price on recent sales, you could be underpriced from day one . . . or the opposite could be true! These are the things your Help-U-Sell broker will help you weigh as you establish a range of value for your neighborhood and then a proper price for your home within that range.
So far we’ve been fairly scientific in our discussion of pricing; but there is another side to this process and it is not scientific at all; it’s emotional. We love our homes. We work hard to make them comfortable and welcoming. We decorate and improve them to reflect who we are. Even if we’ve outgrown them, even if they no longer meet our needs, the value we place on our homes can still get strangely tangled up with the value we place on ourselves. While self-esteem is a marvelous thing . . . it really has nothing to do with the price and salability of your property. It is very important that you understand the moment you put a for sale sign in your yard your house stops being a home that reflects who you are and starts being something very different: a product. A product that has to compete with similar products for the attention of buyers in the marketplace. I know that sounds cold, but it is the right attitude for a home seller – as opposed to a home owner.
Please, don’t go fishing outside the range of value for just a few thousand dollars more thinking you can always come down. You’ll miss that pool of buyers in the marketplace looking for a home like yours right now! And please don’t cling to an unsupportable price because your house has been so special for you and your family. It’s a product now. It has to compete on every level including price.