How to face reality when pricing your home.
The great debate and the most asked question in real estate: “how much is my home worth?”. Well, it depends from who you ask. Whenever I meet a client who thinks about selling his/her house, I need to be ready with a value because I know this question will be asked at the very beginning of our conversation. And I perfectly understand why. After all, who doesn’t want to get top dollar for their property in the shortest amount of time, right?
The reality is that most sellers are biased toward their own property and can only see the scenario from their own perspective. My initial approach to my clients is very simple: encourage a seller to think as a buyer and encourage a buyer to think as a seller. I know, easier said than done. Does a seller tend to value his/her home more than a buyer would? Almost always. I often ask my sellers “If you were in the market to buy a property, would you buy this property for this inflated price or would you look at other properties that are better priced in the surrounding area?”. To close a deal, buyer and seller must meet somewhere in the middle and in most cases, a compromise by both parties is required .
My approach to valuing a property is to use detailed data that includes available properties, comps and trends. In addition, I analyze all the added features in each of the comps and then explain them in a very clear and concise way. I always speak the honest truth, even when it hurts. A savvy buyer will analyze the same data when considering a property, and it is likely our values meet in the common price range area. I strongly recommend to all sellers to price their property at market price and I’ll explain you why. An asking price higher than market discourages potential buyers and their agents from even arranging for a showing. A lower than market asking price might not necessarily attract multiple offers. Both options are wrong and both lead to what I call the decay of property value. Market exposure, showings and offers that will translates into closings can only happen with a realistic target price. Look at the diagrams to see what I mean..
Working with luxury properties requires a robust and comprehensive marketing plan which costs a lot of money and a lot of work. Accepting a listing that is priced outside the market price not only hurts a seller, but it also damages the reputation of the listing broker and creates a condition for which the property cannot sell. A seller who thinks you can always go lower down the road is not getting the right advice. A lot of agents are willing to accept a listing at an inflated price indicated by the seller, only to show up at their doorstep a couple of months later begging for price reductions. Price reductions make for a weak seller and are the wrong strategy, stay away from any broker who suggests such an approach. Attracting the potential buyers in the first weeks of being on the market is the right strategy and it is beneficial to both broker and seller. If overpriced, I would rather walk away from a listing that I know will not sell and will achieve nothing but frustrations for both of us.
In some cases and certainly prior to listing a luxury home, I ask the seller to obtain an independent appraisal to see what an appraiser – a non interested party – thinks about the value of your property. Remember that an appraisal is an opinion of value and never a statement of value – and that is a huge difference. An appraisal is also a useful tool when negotiating offers with buyers and can remove some of the worries associated with purchasing a luxury home. Features like security systems, automations, luxury features, architectural design, etc. make a huge difference in the valuation of a property and they need to be properly accounted for if you truly want to list your home at the correct market price. We provide free marketing consultations and market analysis for any property, give us a call at anytime for a personalized and discreet property evaluation.