Shift Tactic #7: Price Ahead of the Market–Seller Pricing Strategies teaches agents how to price in a shifting market. There is a window of opportunity during the first time a potential buyer sees a property. Therefore, It is within that window that a seller has their best chance to create the right impression. If they are able to create the right impression on the buyer, the house will sell.
The Window of Opportunity in Shift Tactic #7
What is important to know about the window of opportunity in Shift Tactic #7? First, the window has a very short life span. That short life span is just the very first time a buyer sees a house. Given this short life span of opportunity, what should sellers do to create the right impression?
Sellers should use the window of opportunity to market their property as:
- Well-priced
- Serious to sell
Why is Pricing so Important in Shift Tactic #7?
For sellers who really want and need to sell, it is important to understand how the market responds to price reductions. While a seller may initially think a price reduction will draw more buyers, that is not always the case. Sometimes a price reduction may give buyers the impression they should offer less as they look at the days on the market. Also, multiple price reductions may give buyers the impression that there is something wrong with the house.
Ultimately, days on market may increase with price reductions. Homes with price reductions spend on average 116 days on the market. However, homes with no price reductions spend on average 40 days on the market.
7 Tips for Pricing in a Shifting Market
Here are 7 important tips for every real estate agent to follow as they work on pricing strategies in a shifting market. Following these strategies will help lead to a successful sale for your client:
- Know your market’s prices and numbers–study the market.
- Use only Actives for your comparisons to be sure you are seeing current data.
- Understand what is selling in the area, and why it is selling–study the properties.
- Be sure your presentation is current–let your research do the talking for you.
- Discern the seller’s motivation level; the sellers who most need to sell are the ones who sell the most often.
- Work to price the house ahead of the market! Don’t chase the market–lead the market.
- Talk with the seller about price reductions in advance so you can act quickly.
Shift Tactic #7: Three Outcomes and How to Handle Them
Once you place a listing on the market, there are usually three market outcomes with regard to pricing:
- Little or no showings…
Solution: large price reduction in the range of 4-6% (and in some cases more).
- Lots of showings, no offers…
Solution: smaller price adjustment in the range of 2-4%.
- The property sells!
The property hit the market just right and an offer came in right away. This does not mean the home was underpriced; it was priced right for the market.
Ways to Attract More Buyers in Shift Tactic #7
1. Pricing at or below the market.
Pricing decisions are critical to draw buyers who want to look at the property. Be sure your client understands how buyers respond to pricing across the market. Pricing will determine if buyers open that window of opportunity for the seller.
Figure 1: “Attract More Buyers” (Graphic courtesy of Beat the Shift by Gary Keller.)
2. Stage the home by adding cost-effective amenities and improving its condition.
On average, a home with staging will sell faster, and for up to 6.3% more than their asking price. Virtual staging for a digital online presence rose to prominence during the Covid-19 pandemic. However, many sellers still opt for traditional staging techniques. There are cost differences between the methods, so sellers should consider what might work best for their property.
For traditional staging in a home, consider items such as plantings, paint, pictures, fixtures, and furnishings when it comes to staging decisions. Ultimately, the buyer experience will determine the staging priorities. Focus on the following list in order of priority:
Figure 2: “Staging Priorities” (Graphic courtesy of Beat the Shift by Gary Keller.)
Real Estate Market Shift Tactic #7: Price Ahead of the Market with Joe Quattrucci
With pricing being such an important point in attracting buyers, it is important to seriously review Joe’s recommendations in Shift Tactic #7: Price Ahead of the Market. Even if a price reduction becomes necessary, having the discussion beforehand makes the process easy on the seller. Remember: the better a student of the real estate market you are, the better you can serve your client in a shifting market.
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