Many sellers want to get top dollar for their home and they want it to sell is in a timely manner. I have found that there are some great ways to make this happen. In my personal real estate business I focus on educating my sellers on how to create a perception of value in the eyes of the buyer. In most markets in the United States Real Estate has been declining in the past few years. In the Northern Colorado Market we have seen a slight decline with approximately a -1.8% appreciation in 2009, but only a -.87% appreciation in the first two quarters of 2010. Colorado is definitely in a recovering market.
The main thing to keep in mind when pricing your home to sell is price. Homes that are still on the market after 30 days have either been rejected based off of price, condition or location. However, if you have a poor condition the price needs to reflect that, and the same goes for poor condition. Homes should be priced off of the most recent sales in the area and not by the homes that are currently on the market. Homes that are currently on the market are not a good way to price a home because they have yet to sell.
The next step in pricing your home properly, is understanding the difference between an appreciating market and a depreciating market. Some people have the perception that it has something to do with the amount of buyers that are in the market, however, this is not the case. The difference is that in an appreciating market you have more homes coming off the market (selling) then you have homes coming on the market. This drives up the price. Then in a depreciating market the opposite happens. You have more homes coming on the market for sale then you have going off the market. This causes there to be many months of inventory and that brings prices down.
Currently most of the country is in a depreciating market so this post will focus on proper pricing in a declining market. Now, the key to proper pricing is to create the energy of an appreciating market in a declining market. This is done by what I like to call “Drama Pricing” This doesn’t mean we give away the whole farm, but it does mean that we bring the beginning list price of the home down 10% below the rest of the market competition. This creates a “perception of value” in the eyes of the buyer and it brings all the buyers that are currently in the market to buy a home through your home in the first 2 weeks of it being on the market. With this perception of value you have the buyers asking themselves “What can I get this home for?” When we have interest from many buyers we receive multiple offers at full price or above.
We find that by using this pricing strategy the home sells for more then asking price and in the first few weeks of exposure to the market. When homes start to move off the market more quickly, that helps to reduce the inventory which in turn will cause the market to shift to an appreciating market. I find that most sellers that I work with after being educated on on this process are eager to “drama price” their home to get a full price offer or higher.