Here’s How To Price Your Home So It Sells

During this week’s Real Estate Roundup, Steve spoke with Terry Story, a 31-year veteran at Keller Williams, about why it’s so important for real estate agents to look at the big picture to understand how the market is moving. They discussed how each realtor needs to examine their own inventory and how it’s selling in order to get a better understanding of the current state of the housing market. Doing this also helps real estate agents teach sellers how to price their homes.

Pricing Your Home To Sell Is Counterintuitive

To understand how to price a home, you really have to know what the market is doing. Agents have to look at what’s happening with their own home inventories. Are homes selling? How long are they staying on the market? If a home is sitting on the market, not selling, then you have to figure out what it will take to move it.

The economy as a whole has to be considered, of course. But, this is an important point for home sellers to keep in mind,  in both good and bad markets, there is always a buyer. The thing that really makes the difference, that decides whether your home sells, is the price.

Terry talked about meeting with sellers when they want to know what price tag to put on their home. She paints them a picture. Imagine there’s a boat and three men are fishing. The first man’s line is just below the surface of the water; the second man’s line is halfway between the surface and the ocean floor; the third man’s line is near the reef at the bottom of the ocean, where the majority of the fish are. The moral of this story is that the lower line (the lower price) is going to have a better chance to catch a fish (buyer). The less a seller asks for, the more they’ll end up getting. Home pricing is counterintuitive in this way.

People who price their homes in the upper and middle tiers aren’t going to attract as many buyers because the price is just too high. The National Association of Realtors says that if your home hasn’t been shown in the past two weeks, you’ve been knocked out of the market. The only real way to combat this is to lower the price. A lower price will attract more buyers, period. And more buyers equal more competition, more bidders, and, thus, realizing a higher sale price for your home. Counterintuitive pricing!

You Have To Go Where The Buyers Are

In order to sell your home, you have to meet buyers where they are. And most of them are in the low-to-mid-range when it comes to prices. The mid-range homes are tricky. Homes priced at the lower end of that might have quite a few showings, maybe eight or ten in a week. But, going back to the fish analogy for a minute, the fishing line halfway between the top and the bottom is kind of housing market purgatory.

In fact, homes priced in the middle range sometimes help sellers in the lower range sell their homes faster and more easily. People may look at homes in the middle-price bracket, but if they can find something similar in a lower-price range, that’s what they’re going to snap up.

You can also think about it in the sense of animals in the desert. If a predator wants to get a good meal, it has to go where the water is. This is where more animals are going to gather, which offers the predator its best chance of getting a meal.

You have to price your home in a way that gives you the greatest access to the biggest pool of buyers.

Factors Real Estate Agents Should Be Looking At

There are really three prongs to pricing that real estate agents should be looking at: current market prices, the price of homes sold in the past, and the trends that are happening that predict future prices. In order to spot future trends, you have to look at “days on the market.” This is the average amount of time a house spends on the market, from the day it goes up for sale to the day that it closes. Right now, in Boca Raton, we’re seeing about 97 days on the market.

Knowing how long homes are on the market, how quickly they’re selling, helps you predict future trends. Of course, we’re talking about looking at days on the market for hundreds of thousands of homes. Then you have to break it down a little further, into price points. The lower the price of a home, the more activity there’s going to be. As the price point goes up, activity slows.

The big stressor for most sellers—and the agents they work with—is that, naturally, they want to get the most money they can for their property. It’s important to be at the market, not over and not under, unless it’s critical to get the property sold in a very short period of time.

Agents need to help sellers price their home in the sweet spot. This attracts the most buyers and, in the end, helps sellers get the most money for their home. How do you know if you’re in the sweet spot?  If you’re getting eight to ten showings a week, then you’re there. If your house hasn’t been shown at all for two weeks, you’re not and you need to adjust the price.

If you’d like to learn more about buying or selling a home or to learn more about Terry, check out Keller Williams.