Pricing Your Home For Sale
When thinking of listing your home for sale, did you ever wonder why retailers price things at $499 instead of $500? We all have seen and purchased products that are priced just below a round number because $499 feels like a better deal that $500, even though the difference is really only $1.
Most real estate agents subscribe to the '99' strategy. An example is a home that is listed for sale at $499,900 instead of $50,000. In the buyers mind they are buying a $500K home for $490K.
So how does this strategy apply to a home seller? Let's assume your home is worth $500K, based on comparable homes in your neighborhood.
The thing that we need to understand is that there is a range typically for a $500K home somewhere between $480K - $520K, depending on market conditions, time of the year and fluctuating inventory in your local neighborhood. The rang can be greater for more expensive homes and tighter for homes that are less expensive.
Here are 5 strategies for Sellers to help determine the 'Listing Price' of your home.
1- Appeal to the 'Herd Mentality'
Given the high stake in buying and selling a home, the buyer doesn't want to be the only one interested in your home at the list price. So by pricing your property on the lower end of the price range, you could generate more interest in your property. This can be especially true if you need to sell your home quickly. A major benefit to this type of pricing is that you can possibly get into a 'bidding war', which will ultimately net you the highest price for your property.
2- Make sure that it is priced so your home can be easily found in real estate searches
Most buyers will tell their Agent that they want a 3 bedroom, 2 bath home in a certain location and can look up to $250K or $500K. If you list your home for $262K you will not appear in the searches looking up to $250K and you will not appear favorably in searches up to $500K. In this case it is better to be the biggest fish in a small pond rather than the smallest fish in a large pond.
Because most agent understand this point, they will include home up to 10% over the suggested search. A good agent will know that home pricing can be very fluid and buyers should be made aware of properties that can be a great fit for them, even if the home is listed above the suggested search range. In most cases the buyer can make an offer that is less than the list price.
3- Don't get to 'Creative' with your list price
Sometimes Sellers want to have a little fun with their Listing price. I have seen homes listed for $588,888, because 5 and 8 are the sellers 'lucky' numbers. This type of pricing will call attention to the listing but not good attention.
Remember the goal is to get your property 'SOLD' not to call attention to the listing price.
4- Know your numbers before you put your home on the market
In today's market most Sellers have a very high expectation about what they can get out of their property. They want to ask 'Top Dollar' for their property, after all they heard from a friend that the 'Jones's down the street sold their home for X and their property is you pick it: (Larger, Better Looking, in better shape and condition) so surely it should command a higher price.
It is always a good thing to have a contingency plan, in case the market changes. By having a plan from the get-go you will know what to expect if the first plan doesn't work.
5- Understand that pricing is an on going discussion
A great Agent has their finger on the pulse of the market. It is the Agent's job to know what works and what doesn't. As a Seller be prepared to speak with your Agent at least every other week. The Agent should be able to show you a list of analytics to help you understand why you haven't received multiple offers after just one day on the market.
Remember that markets are very fluid, things change, interest rates are sure to rise. Pricing shouldn't be a 'set it and forget it' type of thing. The key to Selling your home is to be flexible.
There are many homes for sale along the Wasatch Front and I would love to show them to you. Please contact me today at (801) 631-3607 for assistance in finding or selling your dream home. Sen a text or write and email to firstname.lastname@example.org Remember to browse through the many Utah home listings at www.SaltLakeAreaRealEstate.com
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