Hi folks. Many times over the years I have heard from Sellers wondering why their home hasn't sold. The usual comment is "it's priced right". Well is it really? My experience has been that any property will sell if the price is right. What is the "Right Price" in today's market? Is it "Market Value" based on the last 6 months of sales? Is it based on homes that have sold in the last 30 days? Is it the "Appraised Value"?
The "Right Price" is the price that will sell your home in 60 to 90 days. But what is this magical number and how do we arrive it? Well in my market (Poinciana, Fl) the right price is 10% to 15% below recent comparable sales. When Realtors are searching the MLS they may have 100-200 homes that meet their Buyer's parameters. My Seller's property, in order to sell, needs to be in the top 5 (preferably #1) properties on the list (by price) and it needs to have a competitive or better co-broke.
If you can achieve this positioning you should be able to get the property sold in a short period of time. Seller's need to know this. It is very important when pricing a house to look at the whole picture that includes active, pending, withdrawn, expired and recently sold listings. I know this is Real Estate 101 but I have met with many Seller's recently whose listings have expired and they have never even seen a "Market Analysis". When asked how they arrived at the listing price they say "this is what we told him/her we wanted." They used a little known technique to price their property it goes something like this:
Down payment for house I want to buy + moving expenses + credit card debt + closing costs + Realtor commission + current mortgage balance="Market Value".
Now I know this may be the new math but folks it won't get your house sold. When hiring a REALTOR(R) it is important that that REALTOR(R) provides you with a detail analysis of current market conditions and counsels you on what it will take to sell your property. They need to be 100% honest about pricing. It may not be what you want to hear but it must be what you need to hear. Then and only then can you make an informed decision on how to list your house at the "Right Price". Make sense?
Reserved parking for TLW
Well said BB. Succinct and to the point.
Even if this is real estate 101 this can't be said often enough. I really like how you put this in terms of competitiveness. I feel that a lot of people fail to think about things in that light.
If you want something sold you're going to have to think in terms of competition.
BB - It makes sense to me, pricing the property right to begin with is the key to success for you and the seller.
Bryant- I don't understand why an agent wants a listing that will not sell because of price! It just does not make business sense.
Good post. I have been busy posting a similar one today. Great minds and all that :)
BB, very well said and it needed to be said. BTW, enjoyed the clip. Wishing you the best with your listing. :-)
"Down payment for house I want to buy + moving expenses + credit card debt + closing costs + Realtor commission + current mortgage balance='Market Value'."
That still has me ROTFLMAO. I'll be laughin' over that line in the days to come...an instant classic in my book.
Hi BB,
Good post, I like the sellers basic math 101. It worked at one time but assured not in today's market.
Nice looking property in the video. Good luck with your marketing effort.
Hi BB:
The answer is still the same; The price that a buyer (ready, able & willing) will pay. The sad part is there are TOO MANY choices for buyers and if a property is not in the bottom 10% of asking price- it may never get shown at all.
You hit the nail on the head with this one! It made me laugh because so many sellers use this very formula (or try to!).
That "new math" is very funny.....but also very real. You don't know how many times I've heard that.
Bryant, it's almost always the price. Once in a while, it's a bad smell or Realtor-eating dog, but other times it's the price;
Bryant,
I am so with ypou on this point. It may not be what the seller wants to hear BUT It is what they NEED to hear! User the market analysis and know your market.
The Wall St Journal had an article today about condos and auctions, but it mentioned "trying to catch a falling knife" vs letting it fall and going from there. That well describes the market.
I understand but I have a special home with extra long nails and it cost 10,000 more so can I get more money for my house than my neighbor did? The logic seems to go out the special windows when I talk to the seller. I'm going to start using truth serum on my sellers.
BB - Well that IS the ultimate question, isn't it? The new math probably won't work, at least not in any market I know, but it seems lots of folks have learned it. Finding the right stuff to give them so they really CAN get it and give up their unique perspective is the hurdle to overcome.
Jeff
I think that is the "new math" that they teach at school...
"Down payment for house I want to buy + moving expenses + credit card debt + closing costs + Realtor commission + current mortgage balance="Market Value" --- you WILL be quoted in my staff meeting tomorrow and by gosh if I can get someone to video it I'll send it to you. You know who gets railed upon for correcting this math equation? (/me raises hand) And people wonder why we won't meet their "sales price".
A++
Bryant, this is a great post. Here in St. Pete Florida is has never been easier to determine a "sellable" price.
All we nned to do now is look at the recent sales and price it right below the comps. everything that is priced above the comps sits for ever, I mean 300 days, 500 days. . . . .
I love your new math explanation which unfortunately is probably too accurate in many cases.
Hi BB, Loved your explanation of the new math theory! Sellers wish it would work that way. Also, I just love your video commericals. Make your day great!
Agree 100 % and very well said. Pricing the home right in the beginning ensures a successful sale. One day homeowners will get it. Arggg
gee a market analysis...what a novel concept....ya think? no that would make too much sense....i love the sellers that think that the perfect buyer will just stroll into their house one day with cash and no comparables and their brain not fully functioning and will purchase the house right there!
BB,
Even if you price a home right in today's market ..by the time it sells it seems to be worth less. It seems we are always chasing the market. It's pretty frustrating when you have to keep telling sellers that the reason they aren't getting offers is because of the spiraling prices and there is other inventory that keeps dropping to cause buyers to look at them. I also think that people aren't getting qualified as easy for mortgages and that isn't helping either.It's always our fault but hey...we can't satisfy them all I guess.
I agree its the price that a seller will sell , and a buyer will buy. Ive been told that since I started. Unique and fairly priced properties are being shown and sold.
Math is too complicated for me. I rely on simple minded stuff. Like, if it hasn't sold, you haven't reached the right price.
"I am not going to give my house away" True- you are either going to price it right or own it for a very long time!
If you tell a seller what they want to hear to get the listing- you will end up telling a seller every other excuse in the book for why you failed to get it sold.
AHHH the right price...isn't that what every broker should strive for but yet so many miss the boat on. I like Lenn's thoughts:)
I really enjoy BPOs because it gives me a good idea how much upgrades are going for and how much those REOs are fetching for VS Owner Occupied non-distressed (currently add another 5-10%!)
Pricing is an art. My potential sellers get a range, just like a BPO. The bottom range is: do you want your home sold in 30 days? The top range is: this is a six month marketing period and do you want to possibly chase down the market?
If the sellers don't like my range, I take my ball and go home. That means they will fight me along the way among many other things and I don't care to be yelled at for 6 months for non performance!
BB-Ditto to Allison's comment! Price it right in the beginning, or be the bad guy later! Many sellers just don't understand. I hear far to often, as many of us do, "But I HAVE to have this much"...sorry, no can do!
You have some great comments here! I should print this out and take it with me on my next listing appointment. I'll pull it out and read all of these to myself, as a reminder to NOT give in on the price:)
BB- I have a new theory (not really new, but new to me), It you don't have a contract in 30 days, reduce to price by 1 percent. Assuming you start at whatever you thought was the correct price, you shouldn't have to do this at all. But just in case. the seller is prepared to do this up front. THis is assuming that the seller still lives in the house. If it's vacant, speed up the process to every 2 weeks. Does this make the seller nervous? You bet, but my argument is that when it's priced right, the market will find it and take it off your hands.
By the way, what do you use to make the slide show?
Hey BB!
Pricing is everything, obviously. I believe it's what the consumer is willing to pay, especially in this market.
Wow, that sounds like death spiral pricing. I'm glad it's not like that in my market area.
If you go through four rounds of 15% under the last sales you'll cut prices in half. I can see why buyers are sitting on the fence waiting. I assume that pretty soon prices will be less than the replacement cost.
I LOVE your new math equation. Do you mind if I use it? Made me laugh out loud because it is the math many of my sellers have learned! However, I find that MOST sellers are now becoming much more realistic, directly related to how sophisticated they are.
Your math equation is spot on BB. Hilarious! While I laugh at it, the unfortunate thing is that it is actually the truth.
That's the best REAL TIME math equation I've seen! We need Tshirts! Where can I get my Tshirt??
"Down payment for house I want to buy + moving expenses + credit card debt + closing costs + Realtor commission + current mortgage balance="Market Value" (period)
Maybe the words could wrap all the way around you!!! WOW!
I couldn't agree more. And it takes constant updating to make sure your price is on target. Good post.
And not only the price... like for instance...great price and looks cluttered and the yard has 10 ft. weeds. No one is going to pay market price for ugly.
What you said...'In YOUR market'...is so crucial. That is why we are the experts! We need to be tuned in to what the 'right price' is in our markets. I did not learn that math formula in school...but it sure adds up!
GBU, BB!
great post. I use a very agressive pricing strategy. If they want to sell, and do not need to sell then I am not taking the listing.
Renee Burrows brings up a good addition I think.
"do you want to possibly chase down the market?"
Thanks Renee!
BB: The right price is what the MARKET DICTATES, which is low right now, and of course sellers don't want to hear it. OR, what Yvette said, "What the buyers are willing to pay." Just my 2 cents.
Hi guys. Great comments!!! Renees comment also got me thinking of how doing lots of BPOs is a great way to become a pricing expert. They've always seemed like a waste of my time but I guess if you do enough of them, not only can you make some good money, but you will also learn your market inside out.
Most of the sellers in my market understand market conditions. The issue is finding sellers who ate in a position to sell. With values down over 50% in the last 18 months most are upside down. It's a very difficult market in Poinciana Florida.
The "video" tour was made with http://realestateshows.com
Thanks everyone for stopping by. Now go sell some houses!!!!
BB - Amen! - I couldn't have said it any better myself. I have also come across sellers who recently had listings expired and told me they never saw a "Market Analysis". What's up with that? I have to wonder if where the heck thos agents got their licenses ...K-Mart ...blue light special??? I think this is outrageous. Last listing I took, I noticed the previous agent had 60 listings - I guess she felt if half of her listings sold she'd be doing good! There should be a law requiring agents to provide a CMAs. Until then, it's just plain unethical to not provided the data to help a seller make an informed decision. Is this at least a matter of ethics?
Bryant,
Yes, that seems to be the new math. I would say it is, "How low can you go without bringing money to the close"?
Bryant,
Thanks for the post. Price point positioning is really the focus of the day. The challenge is getting the seller and buyer to a reasonable understanding of this approach. Sellers still think the prices are too low and buyers conversely, still think there's a far lower bottom to be realized.
Fantastic post. I could not say it better myself!
;)
BB - as usual you know how to give to 'em straight up! This will be going out to my readers too! Thanks for saying it so well. Now gotta go sell some houses :) {hugs to you and TLW - thinking of you both}
I agree, Bryant! You have to look like a good deal in this market to get the buyer's attention...first in the door....then monitor feedback as well and do adjustments as needed to stay competitive with the other similar properties offered for sale. It's more about competition than comps!
As usual Mr. BB, you have said a mouthful... we find in our market that many sellers feel that they should be getting 10% MORE, not Less, than the comparable houses that have recently sold... and they dont sell when priced that way... our firm declines such listings. And our buyer agents do tell the listing agents this exact thing.
Never the less...
Great post!
Hope you are weathering the storms well...
You are right on point, as always! I love the math, I will have to quote you, hope you don't mind!! :)
I wrote a post about why a listing expires just about two weeks ago and I said the same thing. It all comes down to price and if you look at what has sold and what hasn't the expired ones are always more!
It's amazing to me that so many agents walk into a listing appointment, get the listing, and the SELLER actually tells the agent what the price should be! Unbelievable, especially in this market.
Tracy, I so agree with you, yet I see it happen all the time. Price counseling is one of our most important services.
Hi all. Sorry I've been such a bad blog host this week. Between spending time with TLW at the hospital and running my business I'm just running out of time. BUT.....I am reading each and every comment and as always appreciate you stopping by. THANKS!!!