We’re in a market in which pricing a house RIGHT can be very enigmatic.
NAILING a price happens by gut instinct more often than we care to admit.
The more anal retentive amongst us are hell bent on finding sufficient “Comparable Sales,” hyper analyzing current inventory and market conditions, and peering into crystal balls.
In many segments of the market there are NO comparable sales to consider . . . while in other segments, there might be TOO MANY with a wild array of values.
“For this house, I could justify a price of $200,000 and a price of $275,000 . . . and could reasonably assure the Seller that it will sell . . . The key variable being the time it will take to sell (But that doesn’t seem to be very predictable either.”
We are the PROFESSIONALS!
Shouldn’t WE know how to nail a price better than the average bear?
How often do we get it right the first time?
Tomorrow Wed 1/25, I’m leading a session (mastermind) about “Actually SELLING a house (instead of just “Listing a house for sale”), and I know that pricing is a critical component and is perhaps the most slippery in this “Now Economy” (Contact me if you’re interested in coming – only a few seats left – It’s FREE and includes FREE Lunch provided by Chris Bontrager with RiteRug)
Historical data isn’t always helpful . . . Prior sales are all over the board in price and condition and ownership (REO, Short Sale) . . . and what the current owner paid for it and when is completely irrelevant to EVERYONE (Including the prospective Buyer).
How do we simplify this conundrum?
Seth Godin offers some simple advice in his recent blog post:
The pricing formula (S&S)
Italic is quoted excerpts – to read the full post (Recommended), click the link:
. . . We had three prices in mind, and the five of us couldn’t agree. So we did the only scientific thing: we flipped a coin (two out of three, just to be sure).
Pricing your product is actually simple, as long as you consider it from the buyer’s point of view. How much it costs you to make something (or bought it for) is irrelevant. They don’t care . . .
The two keys to the analysis:
Substitutes: Every purchase is a choice, and that means the buyer can choose to do nothing or buy something else instead . . .
Story: The other half of the pricing formula is the story the price itself tells . . . You can tell a story of value/cheapness/affordability, or a story of luxury. If you price your product or service near the median, you’re telling no story at all with the price, giving you the chance to tell a story about some other element of what you sell . . .
So . . .
Work your magic out there and do your best when pricing . . .
Don’t over-complicate the process . . .
and if you represent a prospective buyer and think the listing price is WHACKED (way high or low) . . . don’t spend hours and days attempting to find out how the Seller or Listing agent came to that price because they might have just flipped a coin (2 out of 3).
MAKE A WRITTEN OFFER and convert that price into real market value by negotiating a price acceptable to both Buyer and seller.
The Listing price isn’t much more than a conversation starter 🙂
Sell MORE houses in 2012!