It is perhaps the greatest story every NOT told to home sellers, which accounts in a large measure to the thickness of most MLS books, the frustration level of most owners therein and the popularity of antacids amongst real estate practitioners.
For reasons (make that ‘excuses’) ranging from misdirected kindness (eg: “I didn’t want to hurt their feelings”) to downright cowardice (eg: “I was afraid they’d kill me”), far too many would-be “professionals” neglect to sit down with their prospective sellers and teach them the following “facts of real estate life”.
FACT #1: Your house cannot sell for a penny more than the best offer obtainable from the best buyer available in the current market.
No house in history has ever sold for a penny more than the best offer that could be obtained from the best buyer that could be found in the then-current market. Prospective buyers make hard-nosed comparisons among the many properties that are competing for their attention. Recent sales of similar properties have historical value, but the buyers involved in those sales are no longer a factor in the competitive picture. The one “best buyer” we are looking for is going to be found in the present market place, not in the past record books. Our job is to find that buyer and obtain his or her very best offer.
FACT #2: The only way to determine the true value of a house is to thoroughly test the market and aggressively challenge the competition.
Appraisals and other expert opinions can be helpful in establishing a listing price for your home, but its ultimate selling price will be determined by the prospective buyers in the current market. Buyers will compare your house with other offerings in their price range and make judgments. It is critical that your property be competitive in price and appeal with the other options that these prospective buyers will be considering. Expired and withdrawn listings reveal the experience of others who have already tested the market with negative results.
FACT #3: Testing a bigger market and a better market with greater skill yields a better price.
It stands to reason that the larger the market you can reach and the higher the quality of that market, the better the price you will realize. For example, sellers who are working alone can expose their home only to the small segment of the market that can be reached by a single sign and limited advertising. It is also important to note that, in spite of the multiple signs and substantial sums of money spent on advertising, these two sources typically account for only about 20 percent of the actual buyers attracted to a typical real estate office. The other 80 percent of the market is represented by the efforts of cooperative brokers and the marketing clout of real estate professionals. The buyers most ready, willing and able to act are almost invariably availing themselves of the services of real estate professionals. Finally, that “one best” buyer, unless he or she is being handled by a skilled professional, can often come and go without making a commitment.
FACT #4: An appropriate listing price will, immediately and consistently, attract attention and generate activity.
The process of testing the market need not be a lengthy one, regardless of marketing conditions. When a property is first exposed to the market, both buyers and brokers make instant evaluations of the offering and, if it compares favorably with that they have already seen, it will not only attract their attention, but will motivate them to inquire for details and arrange appointments to inspect. Your listing price must be realistic enough to immediately attract this attention from buyers and brokers. If it does not do so, while competitive properties are attracting attention and generating activity, you have a clear indication that the listing price s not meeting the acid test of the market place and must be adjusted.
FACT #5: A home that is priced realistically and marketed effectively will usually sell.
There’s an old saying that the three most important words in real estate are “location, location and location”. Like a lot of old sayings, it is simply untrue. No matter how poor the location might be, there is a price at which any property will sell and that price can be determined only by testing the market. Unless the price and terms are competitive, the chances of a house selling are “slim to none”. Even the most “realistic” pricing should be supported by thoroughly testing the market and aggressively challenging the competition.
When realistic pricing is combined with effective marketing, there is a buyer for everything and, given these conditions, any house should be able to be sold in any market.
Houses that languish unsold on the market for months and even years are violating the law of supply and demand, causing unnecessary inconvenience and financial damage to both their owners and agents.
The market is not always kind, but it is never wrong, and those who believe otherwise pay a heavy price for ignoring the “facts of real estate life”.