Are you looking at homes for sale in your neighborhood and wondering, “why is my neighbor listed for such a low price?”
We love this question!
And we’re going to give you a peek behind the curtain so you can learn about one of the most important pieces of our “secret sauce”…effective pricing strategies in our current market.
In any market, the pricing strategy is a vital part of the marketing puzzle. In today's market, deciding your list price is not like anything we’ve seen in the past.
When we prepare for the pricing conversation with our clients, our first step is research. We conduct a comprehensive analysis of our seller’s local market area. Our job is to identify the most recent comparable homes within a certain distance of the seller’s home. Then we determine a price range and discuss the pros and cons of various strategies with our sellers.
Important side note: the seller ultimately chooses the list price for their home.
To determine a list price, we must understand how buyers think, behave, and evaluate homes. This varies in each market.
So, what’s different about this market compared to past ones?
Today, buyers expect to be competing with multiple offers.They anticipate making an offer higher than the list price, sometimes including escalation clauses and waiving other contractual contingencies.
We want to give our sellers the best opportunity to be in a strong negotiating position. We want to provide them with leverage.
How do we achieve that with pricing?
We consider the “list to sold price” ratio of the local recent sales and build in room for buyers to bid above the list price.
While it’s tempting to list your home at the last sales price in the neighborhood, you’ll have a much better experience if you consider the original listing price and look at the results achieved by your neighbors.
Listing too high results in a home sitting on the market, without offers and sellers will likely need to lower their price over the first few weeks, with the hope that they can keep attracting interest. We never want this to happen to our clients. This means they have lost all of their power in the market.
Is this helpful? I hope so. Call me if you want to chat about any of this. I love the work I do and I’m happy to talk more about it!
PS: Don’t even get us started on those Zestimates! Or maybe that’s exactly what we should be talking about. We’ll fill you in next month on how Zestimates work!
