My Real Estate Blog

I can't tell you how many times I've heard from potential sellers who start listing appointments with, "We really need to net this amount of money." The declaration usually goes hand-in-hand with the Seller's instruction to: "Try this price, I don't want to give it away," which is usually followed by, "We can always come down later, but we can never go up."

Some sellers don't realize that if you start higher than the property should be priced, you set yourself up for a costly error. Pricing must reflect what the market will bear, not what the Seller needs to net.

Here's a situation you want to avoid:
Sellers select an agent who clearly demonstrates the "get the listing at any price" mentality. The result: The home is for sale at a price at least $100,000 over market value. Every agent in the area knows it's overpriced. Their listing agent knows it, too, but he's more interested in the for sale sign than the sold sign. He's hoping something good would come out of this poorly priced situation.

The only way they would win the bet is if they found a two-suitcase buyer – a buyer with one suitcase that is full of money and another suitcase that is full of stupid!  No one would come close to their asking price for a long time to come, if ever.

You can bet that agent didn't arrive at a price $100,000 above market value based on research or analysis. He listened to his client's pricing input, which was based on what the sellers want to net in order to buy another home for cash, so they have no mortgage.

This is truly a ridiculous approach, but it's all too common. Most people who want to start high and reduce later are motivated by the need to net a certain amount. The sad thing is the approach is nearly always counter-productive. Aiming too high rarely works.

The only time you can afford a "start high come down later" Seller is in a market environment where prices are rapidly appreciating and inventory is low. Even then, be sure you're working with an owner who really wants to sell; otherwise you're apt to waste time while your client tests the market's pricing tolerances.

Here are a couple of questions that potential sellers should ask themselves before ever setting down with an agent: 

1)  Is my motivation to get my home sold greater than my motivation to achieve a certain price?

2)  When I go out looking for a home to buy, am I going to be concerned with what the Seller needs to net?

Coming in on-the-button That headline probably tips my hand and reveals my preference, so I'll just say it clearly: I personally believe on-the-button pricing is the single best pricing strategy – though too few Agents use it.

Homes that are listed at market value stand out from the competition. Compared to all the overpriced options, they strike Buyers as a value. This leads to traffic and a high number of showings by other Agents.

While "The Price is Right" might be a fun show to watch, it's not the way to come up with a price for home!