Are you thinking about selling your house and you're trying to figure out
how to price the thing? Well, hold on, I'm here today with three pricing strategies
to help you figure out how to get the most money in your pocket. Stay tuned
until the end for a bonus tip about the psychology of numbers and how the
particular number you choose may impact the buyer.
Hi, I'm Emily Farber with Lepic-Kroeger, Realtors in Iowa City, Iowa. Thanks for joining me.
So, let's talk about pricing strategy. Price is a enormous factor when you're
selling your house because when you get the price right everything else should
fall into place. Get the price wrong and you're going to have a rough go-- often
from start to finish. First off, when you're selling your house
you need to park your emotions at the door. Your home becomes a house. Notice
the change in language. It is no longer your sanctuary,
it is a house which is a commodity, and you are engaging in a business
transaction. Here are three strategies for pricing your house. Number one, hit
the nail on the head from the get-go. If you're not one to play games, do your
research, know your competition, and pull
comparables of the recent past solds that are very similar to your property
in size, location, and amenities. Once you have those data points you'll have a
range. A likely selling price range for your house. Now, there's a lot of other
factors besides just condition that will affect the price of your house and
either drive it up or down within your likely price range. Things like power
lines, cell phone towers, road traffic, landscaping... all kinds of things like
that impact the value and the perceived value.
Price strategy number two. Swing high. Hey, I don't necessarily
recommend this one, but I can see why buyers are attracted to it. Everybody
wants to get the most money out of their house possible, right? Right.
However, purposely pricing your house at the tippy top of the price range comes
with a lot of high risk. Let me explain. The first big risk of this strategy is
that you are never going to have your most likely buyer walk through the door.
Let's say your house, by looking at the comparable properties of recent past
solds, you determined that the most likely selling price of your house is
about $250,000. But, after all, you've got Delta faucets and
you planted a new tree, and you have some, you know, window treatments that you
bought at Home Depot, and you think your house might be worth just a tad more
than that. (Note the sarcasm.) Okay, so you decide to price your house at $260,000 figuring that if you
have to, you can reduce the price or you can negotiate once you have an offer,
right? Mmm... not so much. The problem with this theory is that you're most likely
house buyer, your target buyer, your ideal buyer, might not even walk through the
door. That ideal buyer is going to be searching for homes priced between, you
know, probably $240K and $255K. Remember, you priced yours up at $260K so you're never
even going to fall within their search parameters. That's really a shame
because your house priced at $250K, in that price range of $240K to $250K, would have
stacked up on the upper end. It would have been a fairly impressive house and
the likelihood of the buyer falling in love with the top end of their price
range is high. But, again, that likely buyer is not going to be looking at your
house because it's just too expensive to bother.
On the flip side, the buyers who are shopping in a little bit more expensive
of a range, say they're shopping from $260K to $270K...
your house is gonna seem like a real dud, because it's not actually a $260,000
house, it's a $250,000 house.
So not only is your house going to not have the amenities, the fit and
finish, and the quality that they're looking for...you're not even looking at
your ideal buyer. Another pitfall of "optimistically" pricing your house is
that even if you do get a few of your "ideal" buyers through the door they're
gonna walk in they're going to see that you are unrealistic in your price and
chances are they're just gonna dismiss your house from their mental list.
They are gonna figure that you're in la-la land, they don't have time for for
you to, you know, catch up with reality, and they're just gonna move on. People
think, "Oh, those buyers will swing back around when I reduce the price." But, in my
experience that is often not the case. Once a buyer dismisses a house for
whatever reason it's like a mental switch goes off in his or her head and
they are just over it. Price strategy number three: go low. If you
were thinking about purposely pricing your house on the low end of your
likely selling range, ask yourself a few questions before you open that box.
First off, is your house highly desirable? Is it in a really desirable school district? Is
it in a hot neighborhood? Is it in a price bracket where houses are just
flying off the market? If your house is highly desirable this might be a price
strategy for you. What you're gambling on with this price strategy is that the
buyers are going to drive up the price, not you. When buyers come through a house
and they perceive it as being a red hot value everybody wants to jump on that
train, so the buyers are going to drive up the price and they might even forego
some contingencies that normally might protect them. Maybe they'll say they're
going to waive their right to the home inspection, or maybe they will say,
"Hey, the appraisal doesn't matter, I'll come up with any difference." All of these
things are great for you as the seller but just be careful that you don't get
greedy and short-sighted when you see those offers tumbling in. It's easy to
let yourself be deceived by the highest number but sometimes the highest number
is not going to be the best offer, so very carefully review those offers and
make sure you are picking the best one. If you take this approach make sure that
you have a goal price in mind so that you don't get greedy and foolish during
the feeding frenzy, if it happens. Now, remember you don't have to accept an
offer. If that frenzy of buyers didn't quite pan out the way you wanted it to
you could refuse to accept any offer and go back to the drawing board.
Now for the bonus tips all about numbers. Did you know that there's psychology in numbers?
It's true! So, one train of thought says that zeros
after a number leave the number open-ended and invite negotiation. For
instance, the experts might say that $250,000 with those zeros on the end of
it opens up the idea to the buyer that there may be room for negotiation. Well nine
seems very finite and very firm
so a price of
$249,900 seems deliberate and shuts down the buyer's
impression that there might be room for negotiation. Like many things in life
people disagree, so there is another train of thought that says, "no, no, no" it's
all about the zeros. When you're searching online usually the search
parameters for the major search engines are on the zero. For instance,
$200,000 to $210,000 or $200,000
to $220,000. So if you price your house at $200,000 you're
going to pick up buyers that are looking in the $190K to $200K range as well
as buyers that are looking in the $200K
to $210K range. So, it's like double the
bonus for your number. If you're solidly in the middle of your likely price range
then what do you do? Do you just split the difference with a 5? Hmm-mmm. Number
psychology says that the number four and the number seven are powerful. And in
western nations those two numbers are often considered lucky. To add to the
confusion about numbers they are highly cultural. Just because the number four
and seven may be lucky around here in the United States doesn't mean that they
will appeal to all of your buyers. If you live in an in an area with a lot of
international buyers it may be a good idea for you to do a little bit of
research about what numbers are considered lucky or unlucky in those
cultures. For instance in number four in China is considered highly unlucky
because the way it sounds, sounds very similar to the Chinese word for death. If
you're interested in some more tips and tricks on selling your house be sure to
check out my Seller's Guide. I have left the link for it down below. I'd love to
help you. Reach out to me-- all my contact information is down in the
description box. Hey, have a good day and I will catch you next time!