Pricing your home when selling is very important. Most people get it wrong. Most agents get it wrong.
Here’s an example of pricing gone wrong. JC Penney changed their prcing strategy. Within a year their retail President was gone and share price is being hammered. Price psychology was underestimated and they are paying a hefty price in return.
The hardest thing for everyone to come to terms with in pricing is that sometimes setting a lower price leads to making more money in the end. Luckily I have a case study based around the last home I sold that helps to illustrate the point.
Real Estate Pricing Case Study
Two homes both in Gainey Ranch. Both in the Greens. Both had nice upgrades.
One had been on the market some time. Then I got a listing on the second one. My home was to be priced at $725,000.
I announced this price via marketing channels about a week before adding the home to the MLS. The other home in the subdivision was priced at $769,000 when I started this pre-listing marketing. The day I actually listed the home they had a price reduction to $725,000.
The price change was a good idea. The seller took notice of a new happening in the marketplace. But at this point they now had over 100 days on the market and buyers could see a 5.7% price reduction had already occurred.
House One Price History
House Two Price History
So What Happened?
So now we had two homes at the same $725,000 price in the same small area. One slightly bigger, one slightly better lot. Some other differences. But price was the same.
The real difference was the home I listed was priced well from day one. The very first open house produced an offer. The home went under contract within 10 days. Eventual selling price $712,000.
The other house didn’t have the buzz. It was already a bit stale and people could see the seller proposition was weakening. It sat on the market for another 45 days. Eventual selling price $685,000.
The Breakdown
House One:
Original list price: $769,000
Selling Price: $685,000
Percentage of Ask Achieved: 89%
Days on The Market: 201
House Two:
Original list price: $725,000
Selling Price: $712,000
Percentage of Ask Achieved: 98%
Days on The Market: 19
If you want to know more about this case study house one was MLS#4671513 and house two was MLS#4716395. The stats remain in the MLS.
Of course marketing has a big impact on selling homes but at it’s very much at your peril to price your home wrong.