Common Pricing Myth
One of the most common myth’s we have come across is that a home needs to have negotiating room built into the price. If the home is worth X, sellers want to price at X+ to allow for negotiating room. The thought is: price it high, then reduce during negotiations and settle at the market price. While this works very well at swap meets or craigslist, real estate transactions have many more factors at play. Additional non-price factors include: Time-frame for the move, loan approval, selling another home before buying, inspections, closing costs, and others. Each of these presents an opportunity for negotiation. Below are a few less obvious negotiations directly involving price, that has nothing to do with bartering.
- Price effect on exposure
The first round of negotiations is getting people to consider your property. When searching for homes, buyers generally filter for a few basic things. They may be flexible on size, style, location, age, number of bathrooms, etc. but generally there are a few things that are absolute deal breakers. Depending on the buyer, those items will vary but price tops that list for everyone. If the home is priced too high, some buyers may not even know that it exists, even though they would be willing to buy at the “true” price.
- Getting to the top of the list
The second round of negotiations is getting buyers to put us at the top of their short list. When searching for homes, buyers will likely view several homes. Some won’t even be visited because they are priced too high, many will be seen and eliminated for any number of other reasons, others still will go on the short list. This is where “value” really comes into play. We will work with you to make sure your home shows as well as it can, but if the potential buyer thinks that it is not as good a deal as another house, condition often takes a back seat.
- Staying Relevant
In today’s market, in most price points, a well-priced quality homes last days. We sold a home in 4 hours a few weeks ago and for full asking price. If a home is priced too high, it will often sit on the market for a while. If a home is on the market longer than the expected length of time people, will wonder what is wrong with it. The last thing we want in a potential buyers mind when looking at your home is that you are desperate to sell. This opens us up to lowball offers. Making the high pricing decision a self-fulfilling prophecy.
- We probably can’t sell for more than the home is worth
In nearly every case, a buyer will be using a mortgage to buy your home. The appraisal determines how much the lender will allow the buyer to pay/borrow. Even if we get a buyer to agree to the too-high price, everything will come crumbling down after the appraisal. The Stahl & Stahl Group does our comparative market analysis the same way appraisers do, following our pricing suggestions will help prevent issues with a low appraisal.
The way to get the most money for a property is and has long been: Price it right the first time. According to the National Association of Realtors®, length of time on market is the single biggest predictor of price. The faster we sell, the more we get. We do an exhaustive analysis when giving our opinion of price to prevent time on market and all of the other scenarios explained above. We don’t want you to sell for anything less than top dollar. In fact, as a result of our compensation structure, we are incentivized to get you as much as we can. No one wants to leave money on the table, using our analysis you will get a fair price in as short a period of time as possible.
