Pricing Right For Today’s Market
Listing 'under market' not always effective
Pricing too high can be the kiss of death for home sellers in today's market. Many buyers are sitting on the fence, waiting to see what happens with the economy, and hoping that home prices will drop further.
On the other hand, the recent uptick in home-sale activity confirms that low interest rates coupled with lower home prices have many buyers convinced that they should buy now. But, they are looking for bargains.
There is no great sense of urgency to buy now. Interest rates are enticing, but low rates are likely to be around for awhile. An $8,000 tax credit is available for first-time buyers -- which includes those who haven't owned a home in the last three years -- if they buy between Jan. 1, 2009 and Nov. 30, 2009. This will hopefully have a positive impact on the housing market. However, the effect will probably be modest.
Homes that sell in this market have several things in common. They are well located, in good condition and show well. And, they are priced right for the market.
The most profound effect you can have on the sale of your home is your choice of list price. Recently a seller listed his Oakland home for $47,000 less than his agent's recommended list price. The under-market price generated a flood of showings and six offers. The listing sold for significantly more than the list price.
SELLING TIP: Some sellers think that the way to get the highest price is to list their home for considerably less than market value. In hot spots in the housing market, this strategy often brings good results. However, if there isn't much sales activity in your area or in your price range, this approach could result in disappointment. You should list at a competitive price, but one that you'll be willing to accept if you don't receive multiple offers.
Many sellers understand the importance of pricing right for the market. But, they don't want to price so low that they leave money on the table. You can keep this from happening by making sure your listing receives comprehensive market exposure -- Multiple Listing Service, Internet advertising with photos, an open house for agents and an open house for the public -- before accepting an offer.
It's usually not a good idea to publish a date for offers in the MLS, unless your home is significantly underpriced and your home is in a popular market niche where lots of buyers are clamoring to buy, such as the low-end foreclosure markets in some areas.
If you list at a price that is at or over market value and you set a date for offers, you send a message to buyers that you are expecting a higher price. This can cause buyers to back off.
Your agent should report to you with feedback on showings, which should give you a sense of the level of interest in your home. Then you can decide whether to go ahead and hear an offer or wait a little longer. In general, you should be prepared to listen to any offer from a qualified buyer. It's natural for buyers to make low offers in the current market.
Given slim demand and the lack of urgency, sellers are challenged to create demand for their home. Condition and pricing are critical variables that you can control. The listing that received six offers showed beautifully and was priced under market. It was in a popular neighborhood and in a price range where buyers could use FHA or other low-interest-rate financing. Buyers walked in and immediately felt a sense of urgency.
THE CLOSING: They knew that the home was a good value and they'd have to act quickly.