Unless you have no problem doing this:
Having worked with hundreds of buyers and sellers I’ve run across certain misconceptions that come up over and over again. When it comes to setting the original list price for a home there are a few which are very common. During my training to get certified as a Pricing Strategy Advisor I saw that I wasn’t the only one who had these misconceptions come up and based on that training and the research I’ve done in the past month I want to help you get a better understanding of why it is important to set your initial list price correctly.
Common Misconceptions on Setting the List Price
Here are some of the most common misconceptions sellers have about pricing their home for sale – see if any of these sound familiar to you.
1. It doesn’t matter if I price it too high to start, I can always come down in a month or two if I need to.
2. It’s better to price it too high than to price it too low.
3. Agents just want to make a fast sale and so the price they suggest is too low.
4. The market is going up so if I price it too high I just need to wait until the market comes up more.
These all sound logical and there are always some exceptions where these do turn out to be true. There are also rare instances of people taunting bears, lions or crocodiles out in the wild and not getting mauled or eaten – but I wouldn’t recommend trying that either!
The only way to show you that these are misconceptions and will ultimately affect what you walk away with is to just look at what the statistics say.
I’ve done extensive training on how to properly determine an initial list price range and have had very good success with this on the listings I’ve taken. But even though I’ve done the training and heard about why you need to price properly right at the start and know that the above misconceptions aren’t true I decided to do some research to see if this all really was true.
What I did was get reports for all sales in 2016 in Glendale based on whether the property was listed for 0-30 days, 31-60 days, 61-90 days and 91 or more days before it sold. Then I did the same thing for La Cañada. I did a search directly in the MLS for this info and then exported the results to a spreadsheet. Using the info in the spreadsheet I then calculated the Sale Price to List Price ratio (how much above or below the list price the properties sold for) as well as the Sale Price per Square Foot. I did this separately for each of the time periods listed at the beginning of this paragraph and then created a graph to compare those numbers. That is the research process I went through to see how time on the market, which is determined by how closely a property is priced to its market value, ultimately affects the overall sale price.
The results were interesting….
As you will be able to see on the graphs below, Glendale residential properties sell for 102.68% of their list price if they sell within 30 days but only go for 96.26% of the list price if they are on the market over 90 days. The price per square foot also reduces from over $480 to nearly $456 when the time of sale stretches out from under 30 days to over 90. Those both work out to about a 5-7% difference which is quite a significant amount on an $800K or higher home.
In La Cañada there are similar changes although the drop in percentage of list price a home sells for isn’t as sharp as in Glendale although the price per square foot is. However, homes in La Cañada have an average price more than double that in Glendale so the actual money loss is about the same.
Bottom line is that pricing a home to sell quickly does benefit the seller and the longer it takes to sell a home the lower overall the seller sees in the way of proceeds at closing. There is nothing wrong with testing out a price (as long as it isn’t ridiculous) but if the indicators show it is too high then it needs to be adjust pretty quickly.
A good agent will present you with the facts and statistics and their recommendation – then you will ultimately make the decision regarding pricing. Make sure that you choose someone who knows what they are doing and doesn’t try to get your business by suggesting a list price that gets you excited but is really too high and will result in a poorer result for you.
Whether you are buying or selling you deserve the most professional representation possible and I will be happy to make sure that your interests are watched out for. Feel free to call or text me on my cell at 818-268-8300 or email me at [email protected].