Pricing ahead of the market ---- can we convince the seller?

By
Real Estate Agent with Alain Pinel BRE 01367196

Pricing ahead of the market, in real estate parlance, involves pricing a property at less than current market value/trend. The rationale is to attract the biggest pool of buyers. If it stimulates multiple offers, then great!

When the market trend shows sales are slowing down, prices are dropping --- it's not enough to merely react, otherwise, we'll be "chasing the market".

What will it take to convince the seller to take the stance of leading the charge? If we don't/can't sell, we all lose!

  • Property sits longer on the market. And the longer it sits, the less attractive it becomes to potential buyers who will naturally think the worst (there's something wrong with the property)
  • Listing becomes "stale" and agents may forget about this property and not show it to their clients
  • If sellers are trying to move up, they miss the opportunity to buy the next suitable home at a price and at the interest rate they can afford
  • Prices drop....so listing price follows. More than two price drops lates, sellers moan even louder "We should have sold it then!".
  • Sellers pull the listing, and "wait until the market gets better"

But convincing the seller to price ahead of the market isn't easy. Realtor faces these challenges:

  • Other realtors competing for the listing may "buy the listing" by presenting seller with a picture that the property is worth more than what this realtor thinks is a marketable price
  • Sellers moan that they will lose too much money, especially after factoring in their improvements, or when they quote recent sales (never mind that they're comparing their property to those in better neighborhoods)
    • Sellers should remember that market value is determined by how much the buyer is willing to pay for it and not what the seller thinks it's worth
  • Sellers not receptive to price reductions, or if they are, they do it in small increments
  • Similar homes come up for sale and are priced just a hair below the subject property's price --- so it becomes a pricing war (reminds me of competing gasoline stations that price their gas within 1-3 cents of each other)

Guess it comes down to seller's motivation, open-mindedness to suggestions, and understanding of the LOCAL not national market trends --- and of course, the realtor's ability to present a convincing case.

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Topic:
ActiveRain Community
Location:
California Alameda County
Groups:
CALIFORNIA REAL ESTATE
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Diary of a Realtor
Posts to Localism
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Tags:
pricing ahead of the market
reasons to sell your house today
pricing strategies
price to sell
price lower than market value

Comments 5 New Comment

Rainmaker
270,395
Ross Quintana
Spokane Washington Real Estate - 509-362-1966
TQ Real Estate Coaching

I create a strategy with each listing up front. I don't force things on my clients but show them great data and then we set the strategy together. It doesn't help to want it more than your clients. Your choices is how will you help your client.

November 07, 2010 02:10 PM
Rainmaker
525,466
Cynthia Larsen
Sonoma County Real Estate Broker
Safe Haven Realty

This is a tough one, every seller has that certain price in their head based on what the last house sold for. Oh, but Mr. Seller, you didn't spend $50K on a kitchen remodel like your neighbor did.

November 07, 2010 02:13 PM
Ambassador
586,823
Janna Scharf
Coeur d'Alene Real Estate Pro
Keller Williams Realty Coeur d'Alene

Right now pricing is absolutely the key.  It can overcome anything else...

November 07, 2010 02:43 PM
Rainmaker
708,212
Fred Griffin, Your Real Estate Broker for Tallahassee, Florida 850-339-4861
Call Fred 850-339-4861
Frederick Griffin, Licensed Real Estate Broker

I love Zig Ziglar and Norman Vincent Peale. but let's temper our Positive Optimism with a Dose of Reality.   Prices here in Florida are going to conitnue Downward. 

Pricing Ahead of The Market is a great concept, Pacita.  If we can just get this across to the Sellers!

November 07, 2010 03:00 PM
Rainmaker
238,246
Peggy Hughes
SF NYC LA
PHA/Peggy Hughes Associates - Professional Moving Organizer

Very well written Pacita - hope the public finds this post as it is very educational.

November 07, 2010 06:22 PM
Rainmaker
657,313

Pacita Dimacali

Alameda/Contra Costa Counties CA
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