Buyers Determine The Selling Price

Sellers often start a conversation with the statement, “I have to get a certain amount”. Of course they then tell you what their carved-in-stone minimum price is—and sometimes they tell you why it's that (high) amount. Sometimes their imaginary “have to get” price is what they paid for the place some years back, possibly with every upgrade added in. Sometimes it's the price a neighbor sold for, and they have to “match” the windfall. Sometimes it's totally irrational, and may be a number that they made up over cocktails with the neighbors, or on the phone with the kids, and are now certain they can achieve.

House prices really are like the prices in the stock market, you pay the going rate when you buy in and sell at the going rate when you leave. But with real estate home prices, sellers always think they control the selling price, but it's the buyers who have the cash and they call the price.

The bad news for the stubborn seller is that buyers don't care about their personal “have to get” number. Buyers usually see a bunch of homes that are available within an acceptable area, and after their home search, they are pretty knowledgeable as to what is priced right and what's not. In fact I like to tell buyers that I will make them experts on homes in their price range, and they can make up their own mind as to what is priced properly, and what is not. After a couple of days out looking at homes, they rarely disappoint.

But how do we tell a stubborn seller that his “have to get” price is too high? I suppose gently is the best way, but the signs will be obvious. First of all, the price may be too high if there are only a few lookers

You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, (ask your agent) that may be a sign buyers think it’s overpriced and are waiting for the price to fall before viewing it.

Another measure of over pricing is there are lots of lookers, but no offers. If you’ve had many sets of potential buyers come through your home and not a single one has made an offer, something is off. What kind of feed-back are you getting? If the other agents who are bringing in the buyers are not encouraging them to make an offer, there are only a couple of things that could be the cause, condition and price. An overly high price may be discouraging buyers from making an offer.

If the home’s been on the market longer than similar homes, check with your real estate agent about the average number of days it takes to sell a home in your market. We call that DOM (days on market) If your home has been on the market for longer than the usual market period, your price may be affecting buyer interest. When a home sits on the market for too long, buyers begin to wonder if there’s something wrong with it, which can delay a sale even further. It's probably time to consider lowering your asking price.

To increase buyer interest and “get 'er sold” you may resort to a price cut. If you have to sell soon because of a job transfer or you’ve already purchased another home, it may be smart to abandon the “have to get” price and generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It’s not how much money you need that determines the sale price of your home, it’s how much money a buyer is willing to spend.

If you want to hold that magic asking price number, and can afford to sweeten the home a bit, consider adding new carpets or stainless kitchen appliances. If you can afford to, then address the questions that buyers have asked—for example if there is a lack of privacy, perhaps adding a hedge or planting bushes will make that complaint go away. Adding a home warranty to give buyers peace of mind can solve their concern about condition. But if you're plum out of cash and don’t have the funds to even put fresh paint on the walls, clean the carpets, and add curb appeal, then a price decrease will cure these issues.

If your home has been on the market longer than comparable homes in better condition, it’s time to accept that buyers expect to pay less for a home that doesn’t show as well as others.

If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what's still on the market? What new listings have been added since you listed your home for sale? When comparable home sales or new listings show your price is too steep, the only way to a sale will be a price reduction.

Dane Hahn is a real estate professional practicing in Sarasota and Charlotte counties. You can reach him at 941-681-0312 begin_of_the_skype_highlighting            941-681-0312      end_of_the_skype_highlighting or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com.