Setting the listing price for your house is a strategic decision with many nuances. One of them is positioning the house in the correct price range. The price range for each house is based on factors such as size, age and location, condition and cosmetic appeal, recent sales of comparable properties, and the competition. Price ranges move with the market. Sellers should monitor activity in their chosen price range to remain positioned correctly to compete. Today, this realistic approach is vital, especially for motivated sellers, and includes being willing to make price adjustments, as needed.
Although some sellers hope to test the market and begin with a listing price outside the REALTOR®’s recommended range, this could be counter-productive for several reasons, including:
- Sellers could unknowingly force the house into competition with superior properties.
- Buyers who shop on line, and today that’s over 90%, quickly learn how to determine if a house is priced correctly. They won’t consider those that don’t measure up.
- REALTOR®s are reluctant to show an improperly priced house.
- Sellers lose the benefit of prime selling time in the first thirty to forty-five days when interest is greatest.
- The number of buyers who can qualify for a loan decreases as the price increases, so the pool of buyers is smaller.
- Even if an offer is received, the house might not appraise at or near the purchase price, and the deal will collapse.
Buyers use price ranges when they look for a house, whether they shop on line, or ask a REALTOR® to select properties to visit. They usually test ranges in increments of $25,000 because, until they look at properties, buyers don’t know what their money will buy. Their preferred price point usually falls near the middle of their range, but since buyers want the largest possible pool of houses from which to choose, they view houses priced a bit lower or higher. If a listing is priced above the high end of their range, it falls into another “search category”. Those buyers won’t see it unless they change their range of acceptable prices, and in most cases they won’t because of the large inventory of properties in their range.
Smart Selling Tip:
When setting your initial listing price, consider the effect that price ranges have on buyers. Be certain the price reflects its current value so it can compete with other properties in that range.
©2010 Sandy LeRoy and Mary Stephens