Home Pricing For Top Dollar in 2022
Transcript
I wanted to let you in on a conversation I have with everyone I meet with who's looking to sell their home about pricing in our current real estate market and how to get the most money possible.
So, typically, we'll talk about a few strategies. You may be thinking, “Well this is easy! Just price the home super high, wait for that New York money to knock on the door, and we're going to get a big price for your home. 99 out of 100 times that approach actually backfires. However, it is a possible approach that you can use. So, first of all, my goal as a listing agent is to make my clients happy, and a great way to do that is to get them as much money as possible for their home. So, I usually suggest three pricing strategies and I’ll have a conversation with the seller to determine which strategy is best for them. This is a condensed explanation of the strategies and I'll save my favorite strategy for last.
1. The first I mentioned earlier: price the home super high and wait for that out-of-state money to knock on the door. This approach really makes me smile a little bit every time because I hear it a lot. I get where sellers are coming from, but it's just not the case. Just because a buyer is coming from out-of-state — maybe an area where real estate prices are really high — they're not going to overpay just because homes are cheaper in South Carolina. In my experience, one of the the main reason that buyers come to our area is because the cost of living is just so much lower. So, it doesn't mean that they're not going to be really aggressive when making offers, but these buyers are not stupid. They're not going to pay way over market value. Another challenge with this approach is that there's no amount of marketing that can sell an overpriced house, so typically these homes will sit on the market, which is not good if a home sits for too much time — it's either price, condition, or location. So, if it's sitting there, the seller gets aggravated, I get aggravated, the home isn't selling, and it's possible that when you do finally sell at a lower price, it's going to be much lower than if you would have started with a different strategy.
2. Price a home way under market value and let buyers bid the home up. While this strategy may work in some markets, it's not a strategy I’ve used in South Carolina. I believe that you really have to have a huge buyer pool and insane demand for this to really work and to feel comfortable with this strategy.
3. My favorite strategy: The seller and I will look at comparable properties together and price the home at what I like to call aggressive to market value. We're not going to go so high that the home gets ignored. We're going to price it just over the comparable properties, maybe chasing the market a little, and in my experience we'll get great showing activity which will lead to hopefully multiple offers. And, in most cases, the buyer activity and multiple offers actually drive the price up. So the next layer to this strategy is how we handle or counter the offers when they come in. Say a home's market value is $350,000 according to the comparable properties. We don't want to reach too high so that the home doesn't appraise. We have a pretty good idea what the home may be appraised for, so, in this case, I’d say let's recommend a price around $358,500. So, let's assume our strategy works and we have offers above list price up to say $368,000. The next step would be to identify the buyer who's willing to cover the difference between contract price and market value or our expected appraised value. Because we're at such a strong market here in South Carolina, in many cases, the offers will already include an appraisal gap, but, if not, it's a great negotiating tool that can help limit the seller's risk of the home not appraising. And, then you have to reduce your price to meet the appraised value if the buyer can't come up with the difference.
So, I hope these strategies have been helpful. As always, if you're looking to sell anywhere in the Midlands at all price points, feel free to reach out. I'd be happy to help!