For Sale - How Much Does Price Matter?

By
Real Estate Agent with Bob Leigh & Associates, Realtors

Like many agents, I go on several listing appointments every week.  Listing appointments are, without a doubt, the hardest part of my job.  As an agent, I am concerned about many things when I go on these appointments.  Will the potential client like me, will I be able to build a solid rapport with them, will they be able to work with me, will I be able to work with them, will they be reasonable about repairs or cosmetic changes needed in order to sell the home?  All these, and many more, are all things I am anxious about when I walk up to the house and ring the doorbell. 

Most of the time, the things I am most anxious about end up not being important factors as to whether or not I end up with the listing. Now at this point, I should let the reader know that I am not a "power lister".  That is, I do not keep 30 to 40 homes in my listing inventory.  There are several reasons for this, but most of them have nothing to do with this article so I will not bore you with those details.  However, one of those reasons has very much to do with the subject matter of this blog...pricing the listing!  Many of the "power listers" I know have gotten that way by "buying" many of the listings in their inventory.  "Buying" a listing has nothing to do with the listing agent investing in real estate by the purchase of it, instead it has to do with taking a listing at a price way above the market value of where the listing will most likely sell.  Many of these agents, take these listings knowing the price is too high.  They take the listings with the knowledge that they are going to come back to the client, maybe more than once, during the life of the listing, and ask the client to adjust the price downward on the home so as to attract more potential buyers.  This is a ridiculous practice in our profession...one that could be avoided, and should be.

Preparation for the listing appointment may encompass research of several things regarding the subject property.  A quality agent should research tax records, subdivision plats and restrictive covenants, GIS maps, public records of title and many, many more things associated with the subject property before showing up at the door.  But perhaps, more than any other research done, the research on the price the home will bring in a competitive market should be the most important. That research, coupled with the owner's reason for selling the property, are the most important factors that should determine the home's listing price.  For example, if the home is located in a part of town not so heavily sought for by buyers...and that fact is coupled with the fact that the owners are being transferred and will not be able to buy another property until receiving the equity from their current home, that would suggest the price be set at or near the lower end of the prices currently being asked for by homeowners in that area.  If however, the owners are in no hurry to sell, have no reason to sell other than they want to, the price of the home could be set at or near the higher end of the price scale.

At my listing appointments, I can almost always guarantee you that the most anxious portion of the conversation between me and the potential client revolves around the price that will ultimately be asked for by the owner of the property.  Let me just say this as simply as possible.  PRICE OVERCOMES EVERYTHING!  If a home needs some TLC and the owner doesn't want to do it before the sale, that is no problem as long as you consider those factors when putting a sales price on the home.  On the other hand, if the home is quite obviously the nicest home in the area, then show the owner's pride and adjust the sales price upward.  Those are simple rules to live by, but many of the agents in our DeSoto County Mississippi market have obviously not learned these simple rules yet.  Too many times, way too many, prices are set too high on homes placed on the market.  Now let me say something else very simply...THIS IS THE AGENTS' FAULT AND NOT THE OWNERS'.

It is a proven fact that the most showings a home will get will happen within the first four to five weeks the home is on the market.  Price too high, and the home will most likely not get the showings it should get.  Then, when the price is reduced at a later date, you will start hearing the proverbial question from buyers..."why did they have to reduce the price on this home?  The buyer is thinking there must be something "wrong" with the property when that is, more than likely, the furthest thing from the truth.  The truth is, the listing agent didn't have the courage or confidence enough to tell the homeowner what the home would sell for, or worse, didn't know themselves.

I get almost every listing I want to get.  Why?...because most homeowners who really want to sell, are looking for some reality in their realtor.  Realistic price means one thing...a SOLD HOME!  If you are ready to sell your home, find an agent who deals in reality, not just realty.  Price your home to sell...after all...that is what the sign says you are trying to do.

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Rainmaker
182,553
Irina Netchaev
Pasadena Views Real Estate Team, Inc. - Pasadena, CA
Pasadena CA Real Estate
Hi Alan, a very well written, thought out post.  Couldn't agree more... pricing is critical!
May 10, 2007 01:15 AM #1
Rainmaker
652,546
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Absolutely - price is critical and very important. Price it too high in this market and the home sits... price it right and it sells.

Carolin Benjamin
Bob and Carolin Benjamin
The Benjamin Team
Keller Williams Integrity First Realty
Gold Canyon, Arizona

May 10, 2007 01:17 AM #2
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Rainer
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Alan McClurg

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