Pricing is the most important variable in the marketing mix. If you do not price it right, nothing else you do will matter.
A lot of people are comparison shoppers. No matter what they buy, they compare things that are similar and rationalize what they want to buy. On a big-ticket item like a house, almost all people act this way. So, knowing that people will compare yours to others is critical when establishing the price. Obviously, the price needs to make sense for what is being sold.
Not many people would stop at a gas station advertising gas at $5 a gallon, when the current rate is around $3. But some sellers insist on using this tactic when pricing their house for sale. Ironically, most houses sell for within 97% of asking price. Most buyers do not want to insult a seller and offer 20% or 30% or 40% less than asking price, as they also know it is either futile or too draining of an exercise. So... how can we make sure to get the most for the money when selling a house? What role does price play?
First, we need to understand that Price is the most important marketing variable when a House is listed for sale. Promotion can get you exposure, and if the Price reflects what another would pay, it will be shown and depending on condition, it will get offers, and if the buyer's bank appraisal agrees with the contract price, the bank will lend against the house.
So how do we price property?
- We first need to see how much comparables (same subdivision, age, size & style) have sold for recently
- We the need to look at the sales price trend: going up, staying flat, going down
- We need to see how unit sales are performing: increasing, stable, sliding
- We need to evaluate how long properties have been on the market, those active, under contract and sold
- We need to look at the amenities and age of them in this house and the comparable properties
- We need to review the condition of the properties and if there have been updates or expansions
All of these things and much more are taken into consideration to establish a price range wherein the house will sell in today's market. Hence, the art of proper pricing is the most important reason to select a Realtor. Experience shows that: "A house priced more than 5% over market value discourages offers." This is why we say, "A house priced right is half sold."
Proper pricing is a mix of science and art, and require that the Realtor be knowledgeable to achieve the eventual "Sold" sign!