The first thing everyone considers before selling their home is price. We want to know how much money can we make? Understand that there is a strategy to pricing your home. A mistake many sellers make is pricing the home too high at the beginning and missing out on qualified buyers as the home sits on the market for weeks or months.
Pricing your property competitively will generate the most activity from agents and buyers. Setting the right price at the beginning is the single most important aspect to selling your home.
Pricing your property too high may make it necessary to drop the price below market value to compete with new, well-priced listings. Consider this statement:
Pricing is not a determination of value, but rather a marketing strategy to drive the most buyers to your home and sell at the highest price possible.
The diagram below illustrates the relationship between asking price and the potential buyers who will look at the property and ultimately submit offers.
An Example of Pricing Your Home For Sale as a Marketing Strategy
Last week, we closed escrow on a home I listed for sale in Del Sur. The home was on the market for only four days and we received three strong offers all for above asking price. The strong seller’s market and beautiful home (pictured below) certainly helped, but another aspect of the success was the pricing strategy.
After consulting with the sellers and reviewing recent comparable sales in the area, we determined the sale price should be $665,000. This price met my client’s needs in terms of netting the desired profit, while also setting it competitively against other listings. At the first – and only – open house we have over 30 groups of buyers tour the home. By the end of the day, there had been three offers submitted.
Because the sellers set the price right at the beginning, we had competing offers, which ended up generating a sale price of $680,000. My sellers earned an additional $15,000 above what they thought they would receive.
Plus, the home was on the market less than a week. In a hot market like we are experiencing now, you really want to strike while the iron is hot. If you get too greedy and set the price too aggressively, you may end up having the listing sit on the market for over a month or more. In San Diego, the median active market time is only 15 days! That’s crazy! However, buyers know this and will wonder what’s wrong with your house, if they see it has been on the market 21 days or more.
When pricing your home for sale, think of price as a marketing strategy, instead of a goal.