“Price is not always the problem but always the solution”.
I don’t know who said this first, but it is just perfect. There is a right price for every single property. Some prices are easier to find, for instance in a development with lots of similar homes. Some properties are very difficult to price for their uniqueness, condition, updates, features and location.
The goal of pricing when a property is being listed is hitting the nail on the head, either finding that one perfect buyer who is ready, willing and able and just buys it, or pricing in a way the market finds very enticing, resulting in multiple offers and a true market price at the end.
I always find it rather fascinating when a multiple offer situation results in at least three or four offers very close together, thus showing that a multitude of buyers came to a very similar conclusion about the value of a property. Markets working at their finest!
To find a price you can take 4 approaches:
- Properties that are sold, I usually take the last 12 months and brackets like size, age, lot size, location.
- Properties in contract, to see how fast a comparable property was accepted by the market and at what price and waiting time frame.
- Properties that are expired or are on the market for a long time without an offer
- Properties that are currently on the market and are direct competition for the property you want to sell
Interestingly these 4 approaches lead to similar results and very quickly you will see a cluster of potential prices.
I often hear the idea of pricing higher to have “wiggle room”. In my opinion this never leads to a good outcome. The market knows when a property is overpriced. You will see less showings and the goal of good pricing -to entice as large a buyer pool as possible- will be missed. The best offers are coming in during the first 2 weeks from listing. If your house is overpriced it will sit and you will ultimately get less than if you had priced it correctly to begin with.
Sometimes sellers had their house on the market before and encountered a buyer who actually made an offer at their (too high) price. Those sellers then see this offer as validation for their price, after all there was somebody who wanted it at this price. A buyer needs to be ready, willing and able.
If your former buyer was willing, but neither ready, nor able, it was not a true buyer. So move on and trust the data. It usually tells the truth.