How not to price your home:
- Take your mortgage balance.
- Add your credit cards.
- Throw in your cars.
- Add a generous portion of all the money you borrowed from relatives.
- Pile on your down payment for that other house you have your eye on.
- Last but not least, give yourself an extra 50 grand just for being you.
- Get a blank look on your face when you are told that the buying public doesn't care what you owe.
- Wait.
- Wait some more.
- Decide you'll stay after all.
Here's a better plan:
- Find out what homes like your have sold for in the past 90 days
- Price the house at that number or 5% less.
- As my son's teacher says "you get what you get and you don't get upset."
- Pack your bags.
The buying public is utterly ambivalent about what you owe to whom as it relates to pricing your property. They only care about their own needs. What you need isn't on their radar, and if you aren't priced in line with the current perception of value, your listing will get stale and sit unsold for months as you chase the market.
Chasing the market is always being one price point behind what the public is willing to pay. You enter the market at $599,000 when you really ought to be at $549,900. You lower to $575 when the market for the house is $525,000. By the time you hit $499,000, it could be a year later and the public isn't willing to pay more than $450,000. Each price drop seems harsh, but your real enemy was starting out too high.
Sellers are in a war of attrition with buyers who lurk before they call, call before they look, and look at everything before they buy. You won't get a call, look or offer until your price conforms to what the public deems fair. The only offers overpriced homes get is low ball offers from bold types who wouldn't pay as much as fair minded people would on a fairly priced home. The only way to win the battle is to price as aggressively as possible and not allow your ego or personal preferences to cloud your objectivity.
Easier said than done!
- J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service.
- Read my short sale blog here.
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Thank you for this post. I'm sure that every agent out here would love to print this out for our sellers if only we could.
I love the saying from your son's teacher. I like the plan.
Good points. I agree with your strategy totally.
Chasing the market is one of the education points I spend the most time explaining to clients. It's an AWFUL strategy!
Great and timely post. I do not understand how some of the Sellers - in this market - are just not getting it. Also I must say, unfortunately there will always be a real estate agent, that will buy that listing (take a highly overpriced listing) no matter how it ultimately hurts the seller in the long run.
Thanks for the post. A seller who selected another listing agent because they would list it higher, dropped by an open house I held recently and said, "I should have listened to you." It had been 8 months and their home was now priced way below our recommended price which was a good price when we suggested it. They chased the market down and lost thousands.
This is all common sense but its hard to get clients to understand that it is not 2005 anymore when any price you asked, you could get.
Tom- absolutely! We all were so smart because if we priced the house wrong the appreciation curve kicked in. Voila! We just outran our mistakes. Now pricing is a science.
Dan- Hopefully you'll get the listing after they expire.
J. Philip, very pointed post. Agents should also read it carefully. Chasing the market is always a losing proposition.
English Major pulled a good one again! Thanks for a good laugh and a great post!
Excellent post! I can't count how many times I've had to help a seller see the light when they've tried to price their home the wrong way.
Very good post and so true. I am going to reblog it(thank you) on localism
Ty
I'd say that pricing is half art and half science. I look at each category when I price, especially regarding short sales. I was pricing a short sale in El Dorado Hills yesterday. The "active short" listings were $50,000 to $100,000 higher than the "active short contingent" listings. It's easy to see what was selling and what wasn't. The seller felt she should get a higher price than the price I suggested. I then explained that list price and sales price are 2 totally different animals in this market. Most homes, if priced below market, sell above market.
Hi J Philip~ Oh My Gosh! This is great! I have got to re-blog this one for sure!
Yep, this is a reblog, a bookmark, and a reread. Thanks for the input!
A reblog indeed - could not have said one word better myself. Thanks!
Applause, applause. Well written and too the point, thank you JPF.
Great post!!!!
Have you seen David Knox video " Pricing your home to sell?" It is very good.
I have my sellers watch it, and STILL sometimes it does not break the denial.
J. Philip - This is an excellent and straight forward post on "how Not to price your home."
You said everything I've been wanting to say to my clients. Your post was perfect. I'm reblogging it as well and have flagged it for a Featured Post.
I'm all for being candid and I love the line about the buyer doesn't care how much you owe. Thanks.
This reminds me when I lived in Brazil for some time and was looking at some real estate there. It was not uncommon to increase the price the longer it took to sell because the seller was adding all these extra expenses, some of which were very interesting... ~Rita
Hi Philip,
Congrats on your gold star here. We've added you to our associates since we do get to refer business up in your area occasionally because you are not far from us! Best of luck to you in the coming 2010!
Lisa Hammerstein
And the beat goes on, beating a dead horse that is. I often wonder what goes through the mind of sellers and agents also. But you have made some good points.
Hi Philip! I'm with Steve--you can preach about those listings that continue to chase the market but, some just won't listen--glad they belong to other agents!! LOL
Great post--humorous but, real at the same time!