SELLING & PRICING BASICS

The agent has no control over the market, only the marketing plan.

Never select an agent based on price.

Pricing in rising and falling markets - Overpricing in a rising market may be OK- Overpricing in a falling market is disastrous.

Market trend is as important as pricing, make sure your agent understands market trends.

Four kinds of numbers used to represent your property:
- Cost - What was paid plus capital improvements
- Price - What the seller wants
- Value - What the buyer is willing to pay
- Market Value - What a willing buyer and seller will agree upon.

Regression, Progression and Substitution:

-Regression - the phenomenon of an expensive house being decreased in value because of the lessor desirable homes around it.

- Progression - the phenomenon of a home selling for more than it's worth because of having more expensive property or a more desirable area around it.

- Substitution - the value of an amenity is based upon what it will produce not what it will cost.

Reasons for overpricing:

- Over-improvement - a seller cannot select, add to their lifestyle, enjoy it and expect the buyer to pay the original cost.

- Need - the need for money does not increase value.

- Buying in a higher priced area

- Original purchase price too high

- Lack of factual comparable properties

- Bargaining room

- Move isn't necessary

- Corporate buyout

The largest impression and most impact a property makes on the market upon buyers and upon agents is in the first few weeks of the listing. Therefore, it should show the best and be priced the best during those weeks.

Benefits to Proper Pricing:

- Faster sale which will save carrying costs and surety has value.

- Less inconvenience

- Exposure to more prospects

- Increased salesperson response

- Better response for advertising

- Attracts higher offers

- Means more money to sellers

Dangers of Overpricing

- Since an appraisal is required in financing a property, it's futile to price a property for more than it is worth . . . it won't appraise!

- Most buyers are comparison-shopping and looking at your home may convince them to make an offer on a different property.

- Many potential buyers won't even look at an overpriced home, thinking it's out of their price range.

- Properties left on the market for extended periods of time usually become "shop-worn", causing buyers to believe something is amiss.

- Overpricing tends to dampen the other agents' attitudes, making it less likely to be shown.

- Overpricing lengthens marketing time and invariably results in a lower selling price than would have otherwise been obtained.

The Importance of Intelligent Pricing

More buyers purchase their properties at market value than above market value. The percentage increases even further when the price drops below market value. Therefore, if you price your property at market value, you are exposing it to a much greater percentage of prospective buyers and you are increasing your changes for a sale.

ASKING PRICE ATTRACTS % OF BUYERS

+15% of market value 10%
+10% of market value 30%
At Market Value 60%-10%
under market value 75%-15%
under market value 90%

SELLING PRICE VS. TIMING

It is important to price your home properly from the start, while buyer interest is high. Timing is extremely important in the real estate market. Since the bulk of activity will be highest day 4 through day 30 the importance of placing your property on the market at a realistic price and terms from the very beginning is critical. A property attracts the most excitement and interest from the real estate community and potential buyers when it is first listed; therefore it has the highest chances of a sale when it is new on the market.