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Pricing mistakes sellers make

Despite a seller’s best efforts, opposition and emotions often take the place of logic and reason when it comes to pricing their home for sale. Many times, sellers have their own ideas regarding a solid pricing strategy when working with an agent to set a sales price for their home. Below are six pricing mistakes that put sellers at risk.

“I want to price my home higher so I have room to negotiate”

There may be a small margin for markup between what the average list price versus sales price for an area may be. However, padding the listing price as a negotiation tactic will price a seller out of the market. A seller may then run the risk of missing the opportunity to have qualified buyers look at their property.

“What is the price per square foot for my area?”

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Price per square foot is a general way to look at the health of a market area. It is not the sole factor that an agent will use to determine a listing price of a home due to simple economies of scale. Agents will look at variable conditions including the specific home updates and size when looking at the price positioning of a home.

“My upgrades are worth… “

Upgrades may add perceived value but not necessarily financial value. Consider there are two similar homes in a neighborhood, one with landscaping and one without. The landscaped home may sell quicker than the same house that is lacking it. While a seller did not gain any more money because of landscaping, there is the perception the home was a better bargain because landscaping made it appear in better condition.

“But I paid… “

What a seller pays for their home has no bearing on what the home may be worth in the current market. Real estate markets are cyclical and can shift on a month to month basis. A home is only worth what the statistics forecast and in the end, what someone is willing to pay for it.

“If a buyer wants my home, they will pay what I am asking.”

On TV, maybe. We don’t live in a market where it’s common for a buyer to overpay for a home because a celebrity roamed the halls. A seller will take a chance marketing to the wrong buyers, missing the opportunity to find a qualified buyer for their home. In the event a seller does receive an offer, a low appraisal may put a snag in the sale.

“My home is worth because the internet said so”

As opportunities for market research are made available to sellers, agents are forced to know the housing market well and defend their pricing and marketing plans. The internet has given sellers more leverage by making agents accountable for the information they provide. It has not taken the place of the training and specific market insight an agent can provide.

New Mexico is also a non-disclosure state and property sales prices are not provided to the public. So, that pricing information a seller may see on that third party site could have come from anywhere. Pricing a home for sale is not a science, but it does take careful skill and training. Real estate agents are still a valuable resources when looking to create a solid pricing plan.

 

Kellie Tinnin is the Career Development Director for ERA Sellers & Buyers Real Estate and a real estate blogger in Albuquerque, NM. Kellie is an advocate for raising the bar in the real estate industry, often writing about how real estate agents can improve their service to the public. Visit her at: www.kellietinnin.com

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