Pricing Your Property
Pricing Your Property
One of the most important factors in marketing real estate is pricing. Property that is priced too high will not motivate buyers to make an offer. While every property is unique, recently sold and competitively priced available properties with similar features can provide valuable comparisons for determining the appropriate listing (and likely selling) price. Since buyer demand is key to obtaining the highest value for your property, strategic analysis and pricing considerations are critical to achieving success.
A comparative market analysis is performed to determine that list price most likely to achieve the highest possible sales price. The main components of the comparative market analysis are:
• Appearance & Condition
• Attributes & Amenities
• Recent Comparable Sales
• Competitive Properties
• Current & Projected Market Trends
• Likely Buyer Profile
Sotheby’s Knows Pricing
Of the top 10 San Francisco brokerages, Sotheby’s consistently achieves the highest average sales price to original list price percentage when acting as listing agent.
The Dangers of Overpricing
The basic truth: the vast majority of serious buyers and their agents simply will not make offers on properties they consider significantly overpriced.
“If a seller prices a house near its fair market value, the house usually sells quickly for top dollar. If, on the other hand, a seller grossly overprices a property, it tends to linger on the market…ironically, instead of getting more money…(Over pricing) usually stigmatizes a property and reduces the eventual sales price to less than it would have been with more realistic pricing.” – Brown & Tyson, House Selling for Dummies
• Overpricing wastes the optimum moment of Buyer/Broker interest in the property when it’s brand new on the market and the marketing plan is in full implementation.
• Overpricing kills the “sense of urgency” that a buyer must act quickly with a strong, clean offer. It is this sense of urgency that typically leads to the highest sales price either through a competitive- bidding multiple-offer situation, or the perceived threat of the seller receiving other offers.
• Overpricing dramatically reduces the perceived value of the property, because the longer the listing sits on the market unsold, the more buyers assume there must be something wrong with it. Just as competitive offers enhance value in buyers’ minds, an apparent lack of interest deeply reduces value.
• Overpricing helps sell competitive properties as they stand out as a good value in comparison.
• Overpricing usually results with the property selling for less money than if the property had been properly priced to begin with.
What does it mean to buy a listing?
In order to win the listing, some agents suggest a list price considerably higher than market conditions and comparable sales justify because these agents believe this is what the seller wants to hear. This is a huge disservice to their clients.