In today’s market, where demand will soon outpacing supply in Central Texas, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them. There is no “later.” Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes. John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, “Listing Price, Time on Market and Ultimate Selling Price” published in Real Estate Economics revealed: “Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.” Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges. Don’t build “negotiation room” into the price. Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house. Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $200,000, but lists it at $225,000 to build in “negotiation room,” any potential buyers that search in the $150k-$200k range won’t even know your listing is available, let alone come see it! A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house. Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation? The Price is Right Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear.
Blog submitted by: Ron Cooks of The Real Estate Marketplace – Servicing the Greater Fort Hood area which includes: Killeen, Harker Heights, Temple, Belton, Copperas Cove and Nolanville. Feel free to call Ron(254) 702-0064 if you have any questions regarding Central Texas Real Estate.
For Real Estate Listings in Central Texas visit my website at: www.MyKilleenHome.com or if you’re on the go text 'Ron' to 254-227-5799
Author:Ron Cooks Phone: 254-702-0064 Dated: February 22nd 2016 Views: 581 About Ron: I’m a retired Army Warrant Officer that served our nation for 25 years. I was born and reared in ...
My last post covered the benefits of hiring a realtor. By now, yo
"I researched the real estate market in the area by going online first. I found an ad in a magazine and really like what I read so I registered on their website. I couldn’t have asked for a better Realtor, they answered my countless questions with honesty. I always felt like they had my best interest at heart and they were always friendly. It was always sincere and not for show. Our search for a new home was fun and exciting rather than a tedious process. Thanks Again!