Old School Pricing Is Out and Price It Right Is In
Many sellers are determined to set their listing price higher than they are willing to accept so they have room to negotiate. With the New Millennium buyers they unfortunately will not get any offers. Today’s buyers are more educated than any others. The internet gives the buyers the opportunity to research all public records. They know the price of all the homes in the area that sold recently and are on the market. They know the trends, the cost per square foot; they know what the seller paid for the home and how much they owe and sometimes the improvements the owner has completed. If a home is over-priced the “New” buyer is almost offended that someone would expect them to purchase it at the “Over Valued List Price” so they don’t even make an offer. Many don’t even waste their time to view the home. That is the old school pricing method. My parents would have done that. Back then information was not so accessible. With today’s buyer’s research and knowledge they are willing to pay over the list price because they realize they are not paying over the market price. They are just paying over the list price. The old school seller does not understand this new Price it Right philosophy. It is the responsibility and ethical obligation of the professional honest agent to advise the old school seller that their price is too high and to educate them to the New Pricing Philosophy. If not, the seller will not get maximum value. Although the Old School Seller will reluctantly reduce the price after a few weeks it is too late. That property is now stale. It quickly gets a reputation that something must be wrong with it mentality by the buyers and some agents. This property may not deserve the reputation but it sticks. When an offer does come in it will be less than the reduced price and less than the market value. If it was priced right at the beginning most likely they would have received several offers within a week.
SSF Home Price Right and received multiple offers
Buyers are out there. Homes in San Bruno and South San Francisco priced right are having 75-100 potential buyers view their home during the Sunday Open Houses. Homes not priced right get less than half that. I personally know of eight homes in San Bruno and South San Francisco that went on the market with the Price It Right Philosophy and within the first week received multiple offers and sold at above the Listed Price. Not by much but they sold while others not priced right are still on the market. Sellers must understand that for every week their home does not sell it is costing them .25% or more.
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6 Responses to “Old School Pricing Is Out and Price It Right Is In”
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Lee,
How true, we see it every day — the home that is priced right sells and the seller who wants “to leave room to negotiate” ends up chasing the market.
Larry
Lee,
I like how you labled the different sets of situations, and how true is all is!
There is so much information at the consumer’s fingertips now.
Thanks,
Brian
Hi Lee
I think there are two very important messages in your post that we should all learn from, first don’t live in the past, pricing should reflect today’s values and today’s marketing methods, when we get cute with pricing below market or higher than market for room to play, the buyer gets confused or worse yet put off by the whole process. The second message is an extension of the first, just present a clean home with proper disclosures at current market price and it will sell in an acceptable time frame at an fair price.
Sounds so simple, not sure why sometimes we make it so difficult. Great post Lee thank you
Thanks for pointing out the BIG difference between market value & asking price. Market value is what a buyer is willing to pay. This will be based on the comparables of the area, NOT necessarliy what the seller thinks the place is worth. A seller can ask whatever they want, I’m still waiting for the pony I’ve been asking for every Christmas since I was 10. Hopefully, some of these sellers don’t find themselves waiting as long.
Great Post Lee,
Your right on, buyers are definitely more educated than ever, especially with all the information online. It is key for both buyers and sellers to realize the big difference between market value and asking price. Everyone has access to the same information when it comes to comps, but it is interesting to me how far the range of offers can be. It does come down to understanding the market and ultimately how much a buyer is will to pay and a seller is willing to sell for.
Julie,
I wish you the best of luck with your pony…
Hi Lee,
For whatever it is worth, your blog is true about real estate today anywhere. We find here in Atlanta, that when you price a house “right” ( at current real market value0 that is sells in a reasonable time, sometimes with multiple offers. Nice job!
Jonathan