By: Ramy Wali
The Pearl Gates
Pricing houses for a successful sale is never as simple as some might think and constantly changing market conditions and circumstances make pricing a skill. The research, analysis and judgment that go into competitive pricing aren’t readily evident in most agents’ listing consultations.
As of the moment, prices are continuing to drop towards a mature market. The results are fearful buyers, picky buyers and eventually fewer buyers. The remaining few claim that if they cannot get a good deal, then they will just say good-bye for now.
Buyers go too far and begin to offer too little, and only properties that appear to be serious bargains get serious attention. Sellers who are slow to recognise the direction of the market will see their properties quickly becoming overpriced and thus overlooked. The truth is the market remains full of people who want to buy and sell. The question is – at what price?
In a buyers’ market, sellers often go through the five stages of grief: 1. denial 2. anger 3. bargaining 4.depression 5. acceptance. Our job is to counsel them through it…
If someone is to buy, sellers must be aware of and buy into the concept of the “window of opportunity.” This means when a property first comes to the market, it attracts attention from those agents who are currently working with motivated buyers or those who are motivated by the price to go and find one. If any agent or their buyers believes that the property is poorly priced, it loses the opportunity and doesn’t draw their attention. Basically, it gets written off from the beginning. Once this happens, it’s not easy to get those agents or buyers back, even with a series of prices reduction or home improvements. First impressions are the original pictures framed in mind and heart. When opinions get set, it’s tough to get them changed.
Our job is to get them to grasp why pricing it right must happen right now. They only get one chance to make a good first impression. Making the wrong impression will cost the seller time and money.
As per some studies, sellers with price reduction need two to three times longer to sell than those who priced their properties correctly from the beginning, potentially increasing their carrying cost.
Successful pricing means getting the best possible price for a house in that particular market, but the strategies can differ based on the direction of the market.
Sellers must first decide to sell; our job is to show them how to make it happen by directing them on how the market works, then they can make up their minds whether to proceed with the next step or not.
As soon as we establish the market price, the question that every seller should answer is “What should my asking price be?” This is a strategic question, and not a question of value. What is a house worth is a value question, but what a house will sell for is the answer of a sales price question.
However, the most important thing any seller should know is: “What is the best price their property will sell for right now”? Then, there are only two things that need to be considered: where the market is now and what is the direction it’s going in, and this is where they must be strategic if they want to get the best price in the right time.
The challenge is when sellers price their properties behind the market and attract some interested buyers who make below-listed price offers and the seller rejects it.
We might have to remind sellers to treat every offer as if it will be the only offer they will ever receive, but this doesn’t mean that they should accept a low offer.
It does mean that they should get a reality check on how intent they are about selling.
When sellers reject offers, it’s like they are buying back their homes at that price with the expectations they can resell and get what they want.
In conclusion, as property advisors, we should always prequalify the seller’s motivation to sell, advise owners to price ahead of the market to avoid chasing it and secure price reductions in advance to avoid falling behind the market.