Pricing it Right- Understanding How Buyers Think and Search for Homes
Pricing your home right is 70-80% of the marketing of your home. No amount of marketing will sell an overpriced home. The right price should generate showing activity of 12-20 showings in a 3-4 week period. With-in 12-20 showings a properly priced homes will receive an acceptable offer.
Lets look at how the different parties generally view the value of a home for a given real estate market.
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Sellers want as much money as possible and it is easy to overvalue their home based in inaccurate data or lack of data. Buyers tend to make decisions based on lack of data and fear of over paying so they try and pay as little for a home as possible. As a seller you can ask any price you want for a home, but you need a buyer that is willing to pay that price to get your home sold.
One thing sellers always say when their list price is over priced and they are not receiving many showing and no offers is, Well they can always make an offer.....
The problem with that mentality is the farther your price is extended over the fair market value of the home, the less likely the right buyers are viewing your home.
It is important to understand how buyers think and choose properties to view with their agent. Most home buyers are truly looking in a $50,000 price bracket. Say we have a home buyer searching for homes in the $300,000 to $350,000 price bracket. What are they really looking for? Hoping to find a 350,000 to 375,000 home for $325,000. So they are going to choose homes that best suit their needs in a given price range, than call their agent to schedule a showing. Remember, with the internet, most home buyers are choosing the homes they view!! It is important to remember that the home buyer, viewing property online, usually will stop their home search on the quarter marks 25,000- 50,000- 75,000 and so on.
So, say all the data points to your home being worth $315,000- $335,000 and you list for $379,000 hoping you will find that one buyer that will pay more than fair market value for your home. What happens?
Most of the true buyers for your home will never see your home!!
Lets repeat that. Most of the true buyers for your home will never see your home!! Your true buyer is someone who's top end price they can or are willing to pay is $325,000 to $350,000. Most likely your home will never come under their radar, because they have stopped their search at $325,000 or $350,000.
Now your house sits on the market at $379,000, your frustrated at the lack of showings and no offers, the feedback for your home is probably poor or at the very least no one thinks your house is special. Why? People looking in the 350k to 400k range don't want a 315k-335k house!! They really want a 400k-to 425k house. Quite frankly your house does not compare or compete with most of the houses these buyers are looking at. Your home is most likely lacking location, size, amenities or condition that is expected in this price range by the buyers looking at your home.
One other thing to remember about buyers...... To put an offer in on a house, the buyers are usually emotionally involved with that home. They do not want to start a negotiating process that they feel will not have a positive outcome. I have had buyers like overpriced homes but they don't want to bother putting in an offer because they feel the will never get the home.
So lets go back to that $379,000 list price. Say a buyer does like your home but feels the price of the home is 325-335K and they are willing to pay that. They feel they have to start the negotiations 300k or less to obtain that price... That is a price over 20% less than asking. Most buyers think they don't have a shot in hell to pull the deal together.... so what do they do? They move on, because they don't want to go through an emotional negotiating process where they think the outcome will be negative.
Even in this market well priced homes are selling at asking or over asking prices. A well priced home creates buyer interest, the greater the interest, the greater the demand , when there is demand you have buyers competing. Competing buyers create good offers!! If priced right you will create a sense of urgency and buyers will not want to lose out.
Pricing is critical, work with your agent for a very well crafted pricing strategy. Proper pricing will create a shorter marketing time and produce a higher price for you than pricing high and crossing your fingers and eventually realizing that you need to lower the price.
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This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at kevin@kevinvitali.com or call 978-360-0422.
I pride myself in the quality of my work while helpingbuyers and sellers make dreams come true.
Real Estate Services in the northeast Massachusetts, around the Merrimack Valley, Southern New Hampshire including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury