The most important step of the sale process

Dated: July 1 2012

Views: 2644

THE RIGHT PRICE

We don't want to ask for too much and scare away qualified buyers. Even more importantly, we don't want to ask for too little and leave money on the table. Here are several things to keep in mind when setting your price:

Consider the position of the buyers who will be looking at your home. Is it a buyer's market or a seller's market? Is it an easy time to secure a good interest rate or is it a very difficult time? Is the school year starting up soon? Is the holiday season right around the corner? If you can anticipate the thought process of the buyers looking at your home, it will be much easier to set an attractive price.

If you look at market statistics for any area, you will realize that in any given week, only a small percentage of available homes on the market actually sell. Usually, this number is less than 10%. This means that in order for your homes to be one of the homes that sells next week, you would need to be priced more competitively than 90% of available listings. This is a slight oversimplification, but the principle is sound. If you want your home to sell, price competitively (top 10%). There are no points for second place.

Bracket pricing is the art of setting your price to be optimally positioned within natural price range cutoffs. When a buyer is looking for a new home, (s)he tends to define his/her price range with big round numbers. For instance, (s)he may say, "I can spend between $225,000 and $250,000." The buyer's agent will then pull any listings that fit the buyer's criteria within that price range. Any home that is priced at $249,900 will show up at the top of that search query (and likely look very good compared to homes that are priced up to $25,000 less). However, a home priced at $251,000 will never be seen by the buyer or the agent. The difference in the two asking prices is negligible, but the effect that it has on the seller's potential buyer pool is dramatic. Set prices towards the top of brackets, never at the bottom.

Generally, a buyer is not going to pay extra for the good memories that you've had in your home or the difficulty that you will have leaving that home. Try not to conflate sentimental value with market value. 

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