The Secret to Pricing Your Home to Sell
A home without a buyer has no value in the market place. Sure it might have a value to you the seller, and it might have a value to your banker, and to your insurance agent, and to your appraiser. But none of these people are buyers.
So here is the secret to pricing your home to sell – It’s not what you think the home is worth that matters, it’s what a reasonable buyer will think your home is worth that will ultimately determine if your home will sell.
Now you may be thinking – Hey wait, if I left it up to a buyer, they would pay me as little as possible for my home. True, they would. But in the real world every buyer knows that you, the seller, have no obligation to sell your home at any price. To purchase your home the buyer will have to make you an offer you can’t or won’t refuse.
But here-in lies the trap that many sellers fall into (I did when I first started in the real estate business), which is the mistaken idea that we can hold out for an inflated price and eventually the market will come to us.
Buyers are under no obligation to buy any particular home, and no amount of marketing, open houses, websites, or signage will motivate a buyer to purchase an overpriced home.
Because they can buy one of your neighbors homes for less! This reveals one of the most important considerations in pricing your home – Price VS Time.
Understanding Price VS Time
The age old dilemma that has faced buyers and sellers since the dawn of private property rights is a simple question:
What is more important ,price or time?
Believe it or not this conundrum underlies and controls every sellers decision to sell, and every buyers need to complete a purchase. For sellers this boils down to the need to sell within a set time frame or instead to hold out for the best possible price, and as you might guess, for buyers it’s the need to buy within a set time frame or to purchase a home for the lowest possible price.
A seller who would like to sell for top dollar should be prepared to potentially wait longer for a buyer willing to pay a premium price. Like trying to sell ice during December, a seller might have to give the stuff away just to get rid of it, but if they wait long enough, say until mid-August when temperatures crest over 100 degrees suddenly that same ice can have real value. On the flip side, a seller who needs to sell quickly, and doesn’t have time to wait, should expect to discount their price somewhat because of the limited time they have to expose their home to the market.
What’s the difference?
Buyers are in the same boat. A buyer who has the luxury of shopping for a home over a long period of time can probably wait to find a bargain, while another buyer who must buy a home in the next few weeks will probably be willing to pay a premium. Again it boils down to price vs. time. So you might ask yourself what is your highest priority – Selling quickly or selling for a higher price?
When I pose this question to my own clients they answer – I want both! The funny thing is that they aren’t kidding!
Quite a few home sellers want their cake with icing on top. Because of this, many homeowners will attempt to put the responsibility of getting both top dollar and fast sale on the back of their hired gun, the real estate agent. The result can be summed up in one word – frustration. Why? Because no matter how much a seller yells, screams, and kicks a real estate agent, they don’t do miracles.
This is why successful sellers understand that while a real estate agents job is to provide marketing, expert advice, and negotiating services, in the end they don’t own the property. They don’t make the final decisions on pricing. The seller does, and ultimately the seller’s asking price will in large part determine how slowly or quickly the home will sell.
Successful sellers have learned that to price their home accurately means they need to think like a buyer, they need to get inside a buyers skin and look at the world through a buyers eyes. If you’re like most buyers you would probably start online by viewing listings to get a general feel for local home prices.
As a typical internet empowered real estate buyer you will look at an average of nine homes over 1-2 weeks with the assistance of a real estate professional. By the end of your journey, like many buyers, you become so knowledgeable about the market that by the last showing you are able to guess, with reasonable accuracy, each homes listing price before your agent can even tell you.
So what happened here? As a buyer you went from a blank slate, with no impression of the market to having the ability to predict listing prices. A big leap sure, but this description is exactly what most buyers’ experience.
So as you can see, pricing to sell your home is not the price your neighbour suggests, or a friend of a friend, or to recoup your costs of a poor renovation or upgrades.
When we do an Envelope Home Audit and a thorough CMA, you can rest assure that the price we come up with is the one that will enable your home to sell quickly and for you, netting the most money. Remember, homes that that sell for the most, sell quickly!