Pricing Your Home to Sell

One of the most under appreciated skills a Realtor has to offer is assisting a seller in selecting the correct price to market their home. The reason this skill is so under appreciated is that all to often the news is not what the seller THINKS they want to hear. I say THINKS because I want to show you the difference between marketing a home with the right price immediately as opposed to listing it to high and then going through multiple price reductions.

The process to selecting the price to market your home usually begins with the seller determining in their mind how much they want for the property. The problem is that how much you have invested into a property, or how much you need to get out of it has absolutely no bearing on how much a buyer will be willing to pay for it. If you hold or have ever held stock then you know that the seller doesn’t establish the price, the buyer does. If you want to sell your stock you check to see what it is currently being traded for and then decide if you want to sell at that price. Real Estate is not that much different, especially in a market like ours now where there is a very high amount of inventory in every price range.

A good Realtor will do a thorough CMA (Competitive Market Analysis) and determine how much homes like yours are currently SELLING for and base their price recommendation on that information. A good Realtor will use comparable sales as close to your home and as recent as possible. Three comparable is good, five or six are even better. The big difference here is that the Realtor will look for homes that SOLD while a seller, who can’t access this information themselves, will usually look at what other sellers are ASKING for their home. That’s a big difference. A home right next you might have been listed for $500,000 so when it sells you think they got $500,000 but in reality the agreed upon price was $460,000. The average consumer would not know that but a Realtor would.

Many sellers think something like “Well, let’s try it at this price and if it doesn’t sell we can always reduce it later.” The problems with this theory are numerous. First of all the best time for marketing a property is the first thirty days. Why? Because there are a number of buyers anxiously watching for new properties in their price range because they have been unable to find anything that suited them thus far. This pent up demand will focus on the new properties as soon as they come out. If their first reaction is “Nice house but I would never pay this much”, then that first 30 days ends with all the buyers currently in that price range having left disappointed and now the real waiting begins. Second, once a house sits on the market two factors can come into play. Buyers will start to wonder what is wrong with a property that sits on the market too long. If a property has had a series of price reductions then they buyer will think either “they must be getting desperate to sell” or “I’ll bet if I wait a little while longer they will lower the price again.” Either way the property now begins to sit on the market for far longer than it should have. When that happens you must consider all of the money you have tied up into this property that you will never get back. Property taxes, insurance, and interest on your mortgage are all expenses you will never recoup. If a property sits on the market for longer than six months this can really begin to add up to some real money. Had the property sold quickly you would have saved all of that money and you would have been able to move on with your life that much sooner.

A good Realtor’s job, just like a good doctor, is to give you the information you NEED to know. All to often Realtors will tell you what you want to hear just to get a listing. How would you like to go to a doctor and have him tell you that you’re in great shape all the while knowing that you had two or three serious issues that should be treated immediately. I’ll bet you wouldn’t think to highly of that doctor for long. So the moral of the story is this: If you truly want to sell your home then listen to the information your Realtor provides and base your asking price on that. You may THINK you are getting less money than you wanted but in reality if you sell that home quickly the savings in holding costs and the value of your time can easily off set your disappointment. Talk to someone who has had their home on the market for a year, constantly trying to keep it ready to show, and unable to move on with their life and you will get a picture of what can happen when you overprice your property.

SOME GREAT NEWS FOR COLDWELL BANKER FIRST AFFILIATE SELLERS!

It’s not often we blow our own horn in this newsletter but the year to date statistics I just looked up are too good not to mention. So far in 2007 Coldwell Banker has successfully marketed and sold 31% of all the residential properties in Sedona. Of all the residential properties currently under contract CBFA has a 38% market share. You would have to combine the results of our next THREE competitors in order to duplicate these types of numbers. So if you are thinking of selling your home talk to one of our agents if you want to use the company that is truly producing results for their customers. Also, if you have used us recently, Thank you for your part in helping us achieve these results!

Tod Christensen
Designated Broker/Vice President
Coldwell Banker First Affiliate