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For the Sellers, there is a checklist which one needs to take care to put the home on the market, but nothing is more critical than the pricing strategy when you decide to sell a home. In this article, we will try to explore why the pricing is so important and discuss some pricing strategies one can adopt for sale.
The importance of pricing it right the first time is critical because the opening 8-10 days there is maximum exposure to the property when placed on listing service like MLS®. The realtors across the board are actively looking for new listings to work with their buyer clients, as the property becomes stale on MLS®, it loses the attention time as other properties take precedence & come on top when Realtors conduct their searches while working with their buyer clients.
Secondly, since the Realtors/buyers always work on a set range, so setting a price higher than fair value would essentially filter out the property to come up in their searches for the prospective buyers, and you might lose on the opportunity to show your property to otherwise qualified buyers for your home.
Lastly, if we price it too low than what it should be, you stand a chance of losing thousand's of dollars which potentially you should have received in exchange for the title of the property. For the scenarios where property does come in range for a realtor working with a buyer client, if the Realtor is worth their salt he/she would know that property is priced too high. The realtors would rather prefer to show fairly priced comparables active in the inventory and pass on the one priced aggressively.
For an owner when it comes the time to sell a property it's very challenging task to review it objectively, our intent as a seller should be to maximize exposure of your property and selling it in less time at a good price. The pricing of the home should be conducive to maximum showings to qualified buyers which in turn increases the probability of you receiving an offer from a prospective purchaser.
Three possible strategies for pricing we will discuss now, and based on the market condition and the property state these can be adopted, no right or wrong but the one which works best for your case, with my recommendation as well:
Strategy 1 - Pricing it Under Fair Value - this works in markets which more inclined towards sellers, where you want to achieve maximum footfalls in the initial few days in scheduled showings & open houses, and aim to have a multiple offer situation created on the day of offer presentation. The inherent competition will get you to the fair value or more in a seller's market.
Strategy 2 - Pricing it Just Right - according to the fair market value of the property, this approach works for all types of markets whether they are buyer inclined, seller inclined or balanced. When you adopt this strategy, you get exposure of the property to qualified buyers and your value proposition is strong and have an upper hand in negotiations as you have priced it within reason. Your realtor would require doing a bit of work here to prepare comprehensive CMA (Comparative Market Analysis) and share the report to determine fair market value; the CMA should be very detailed & objectively consider all the adjustments to the subject property from comparables sold in last 60-90 days.
Strategy 3 - Pricing it Over Fair Value - when you aggressively price your property when putting in the market, the downside is that you lose qualified buyers, and risking the ones who come to see with price point if they are having a skilled realtor working with them. The only advantage is that you can shave off some amount in negotiation and still get your fair value; however, this IMHO is the least recommended strategy. The approach be adopted when the time is on your side, and you are not in a rush, plus is you will have an upper hand in negotiation as the price has an inbuilt buffer for an interested buyer.
Strategy # 2 is the one which I would recommend to reach your goals as this is irrespective of the market and would lead you fast onto packing your bags and preparing for the next big move.
Wish you all the very best..Mudit
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