By Julie Harris
One of the most commonly asked questions has to do with pricing in today’s market. It used to be, when things were hot you could price it wherever you wanted to. You thought it was 10% over price and it would still sell by tomorrow. Obviously, those days are over for nearly everyone in the country.
- How do you price a home in today’s market?
Even more important than that, how do you price it so well that you don’t have to do four or five price reductions before you get it sold? We all hate doing price reduction calls. There are scripts you can get so you know how to do them properly, but how are you going to avoid having to do multiple ones and how can you get out of doing it at all by selling the house quickly?
What made me think of this was an article I read in a scientific magazine. It’s talking about how cells survive in different environments. “There is an information minimum for life and evolution favors organisms that know more about their environment.”
I read that and thought about how that’s just like winning, listing presentations and pricing things properly. Our agent’s that thrive are just like those cells and it’s because they know more. It’s because they understand more and they took more time. The article went on to say this suggests that there’s “an information minimum for life that natural selection favors organisms that capture more information about their environment.”
- How does this apply to you?
Before you go to any listing presentation make sure you know this:
- What’s the sellers motivation?
You and I both know, if the seller isn’t motivated they won’t allow you to price it right. It’s the same thing, an over=priced listing equals a non-motivated seller. Then, the next thing for you to ask and for you to know before you show up is this.
- Are prices going up or down in that particular neighborhood over the past 90 days?
In most cases, you’re going to find out prices are going down. By how much? How do you find this out? Look at the comps you have to find anyway. Are prices going up or down?
- How many active homes are competing with this particular property and how long have they been on the market?
If all your competition has been on the market for 120 days don’t let the seller believe their home will sell in the next seven that doesn’t make any sense. You’re going to have a lot happier sellers if you tell them what to expect.
Mr and Mrs. Seller, based on the fact that your competition has already been on the market for 120 days and based on the fact that the three best comps we found all took more than 120 days to sell; I would expect your home to sell in the next four to five months minimum, but it could take longer since the trend we’re seeing is longer days on the market and a lower price as opposed to saying, we’ll see what happens, which is what most agent’s do.
- What is the average day on the market for the three to five comparable’s that have actually sold?
So you have how long your competition’s been out there and how long have the sold comps taken to sell? Concentrate on the past 90 days since things are changing quickly in our real estate markets.
This is different for everyone. You should know what the factors are effecting sales. For example, is there new construction in the area where the sellers are buying down the rate and paying closing costs?
If you’re listing something for $200,000 and there is a $300,000 new construction home where the seller is buying down the rate, paying for upgrades and building a deck in the backyard then your house will be killed by that $300,000 new construction, because the payment will be the same for the buyer.
You should know these things. Are the taxes going up? One of my great coaching clients in Vermont sells in an area where taxes have been approved that are dramatically effecting the sales of some of her areas. People know their taxes are going to skyrocket and it’s affecting certain areas.
What about companies moving in and out. Are companies laying off a lot of people? Many people in the Detroit area are constantly dealing with this. There are more people losing their jobs than gaining jobs. People in the up-state New York area, they have people moving into the area for a lot tech jobs, which can affect pricing.
So just like the article I was reading where it says, from their research on forms of life, it seems to me something can be alive in every sense you’d have no inkling of it’s environment. They were comparing cells that do nothing to further themselves and gather information versus the cells that survive and thrive, so we have to be just like that.
We’re alive too and if you want to be alive in this real estate market you have to know your stuff going into that listing. You should all know these things before you show up.
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