Professionally pricing the property for a Seller is a combination of art and science. The key to successfully pricing is to use current Realty Research strategies and marketing trends. It is imperative that the right price is determined in the beginning of your listing or marketing period—the goal being to set the price for optimal results for the Seller at closing.
If you set the asking price properly, the subject will:
- Attract Buyers
- Earn the most money at the time in a current market
- Help you sell the property quickly
A subject’s price is the number one factor that most Buyers use to determine which homes they want to view. The simple fact is that the lender will most likely set the viewing range of homes a particular Buyer can afford. Do not fall into the overpricing trap. Remember the price is set by the Seller, but the value is determined by the Buyer. It is important that the Seller does not allow enthusiasm to impact better judgement. Overpricing is a common mistake that will cost you in the end.
The initial home pricing model should follow these basic guidelines:
- Increase Realtor response
- Exposure to more Buyers
- Generate more calls
- Attract higher offers
- Create multiple offers
- Faster sales
- More money to Seller
- Avoid being “shopworn” (too long on the market)
- Increase Realtor response
- Exposure to more Buyers
- Generate more calls
- Attract higher offers
- Create multiple offers
- Faster sales
- More money to Seller
- Avoid being “shopworn” (too long on the market)
The above general rules are simply a guideline for some of the reasons a subject property has sold quickly in an average market environment. It is usually because the home was priced correctly to start.
There are some common reasons for a subject property being overpriced in a standard market environment. Sellers MUST consider the current real estate market cycle (understanding the differences between hot market, threshold, and cold market periods):
- Over improvement
- Emotional attachment
- Opinion of family and neighbors
- Assessed value
- A move is not necessary
- Bargaining room
- Lack of factual data
- Original price too high
- Purchasing in a higher-priced area.
- Lack of a motivation to sell (testing market response)
- Over improvement
- Emotional attachment
- Opinion of family and neighbors
- Assessed value
- A move is not necessary
- Bargaining room
- Lack of factual data
- Original price too high
- Purchasing in a higher-priced area.
- Lack of a motivation to sell (testing market response)
The LBBA Group realizes there are many factors that drive a particular marketing program, and every subject property has its own set of marketable values. We utilize every known factor during the Comparable Market Analysis (CMA), Realty Research, and analysis of current market data (together with the Seller) to determine the optimal asking price. Then, we determine a customized marketing plan for the subject, which will give the highest exposure, highest offers, and shortest marketing duration (1 to 5 months).
Dangers of Overpricing
The most activity occurs in the first few weeks of a marketing period, so price the subject correctly; then, create urgency. Buyers have already seen most of the available homes in their price range and are waiting for a home with the right price. Therefore, if priced correctly, it will sell quickly. The qualified Buyers are already there waiting for it.
Do not start with a high price and assume you can reduce it later. By the time you make that decision, it could be too late, and the market will be unresponsive, due to Buyers having a “shopworn” sense that there is something wrong with the subject.
Overpricing can cause appraisal problems later in the transaction process. This can lead to loan rejections and lost time. The LBBA Group will always suggest a third-party certified Sellers Appraisal program. This program is reserved for Sellers of qualified properties and will be discussed in our Property Report interview. Our marketing program allows for tools to be used which will guard the Seller from loss of time or money due to a previous overpricing situation. We will suggest a marketing “repackage” program which is designed to add value to the asking price.
If overpriced, your home will not be selected for viewing because of the range stipulations for the subject’s area and can attract the wrong Buyer. Fewer potentially qualified Buyers will respond, and you could unknowingly help sell similar homes in your area that are priced lower. Also, it is important to understand that Buyers and Sellers become aware of long exposure periods and often hesitate to make an offer for fear of something being wrong with the subject. As a closing point, the overpricing of real estate property has been a common activity in many different selling cycles, no matter if the landscape is a hot or cold market. In any environment or market cycle, it is important to use both the science and the art of getting it just right the first time. If you will let The LBBA Group assist you in determining that “sweet spot”, we will help you save money because of a shorter marketing period or extra mortgage payments, while incurring less tax, less insurance, and unplanned maintenance costs. Our market pricing expertise will also recommend the Home Warranty Program over the marketing period to allow peace of mind for both the Buyer and Seller. WIN/WIN. Let us show you how to make the selling process an easy, cost-effective, and pleasurable process.
ROLE OF The LBBA GROUP
The role of The LBBA Group is to assist the Seller with pricing the property correctly using all available information of current market conditions and realty research data. We will provide the Seller with a Comparable Market Analysis (CMA) or an agreed upon third-party Certified Appraisal to use as a baseline for determining an appropriate asking price. There is no “exact price” for real estate, and we do not tell you what we think your home is worth. Rather, we provide real property data and current market trends, which determine market value. We (The LBBA Group) along with YOU (the Seller) determine TOGETHER the asking price. We will make this determination based on factual data and factors we can control. Our decisions, along with marketing timing, conditions, framing alternative options, exposure methods, marketing strategies, and Strategic Partners, have long been a successful recipe for selling homes in Knoxville and East Tennessee.
No agent has control over the market—only the marketing plan!
The LBBA Group’s local and regional marketing plan, along with our Strategic Partners, is a program you can count on to deliver a stress-free and satisfying WIN/WIN selling experience. It is necessary to emphasize the basics of our work ethic: The LBBA Group will be available to you 24/7; we will stay current with market trends and realty research activity; we will estimate your proceeds at closing, help to determine offering motives and formulate counter offering contingencies. The LBBA Group will be right there invested in your project through the entire process from initial contact to closing.
Never select an agent based on price; rather, KNOWLEDGE, EXPERIENCE and INFORMATION!
The LBBA Group: Buying and Selling Real Estate in East Tennessee since 1996.