Friday, January 18, 2008

How NOT to sell your home

It never ceases to amaze me when reviewing the Property History portion of listings how many potential missed opportunities there are to sell a home. The Property History section, viewable only by a licensed agent who is also a member of the local Multiple Listing Service (MLS), contains all listing information in chronological order. The information by MLS number includes, list price, date of sale, close of escrow date with final selling price and ALL price changes. It will also show realty firms, listing agents and relisting under a new MLS number. A good buyers agent will be able to explain the reasons for all changes to a listing.

Based on my opinion, here is a sampling of categories I've named based on the characteristics they exhibit. Perhaps you'll be able to readily identify someone you know that's struggling with selling their home.

First characteristic is what I call the "stair-step" approach to pricing. In this approach, a seller lists their home a little above fair market value to assure they don't leave any money on the table and with the belief that their home is better than all the others even though they haven't seen their competition. I've noticed that sellers keep reducing their list price but just a little each time. This does two things. One, the price reduction generally follows the market lower rather than being aggressively competitive. And two, like the proverbial Pavlov's dog, it trains or conditions potential buyers to be patient for their next award by waiting for another little "treat" or price reduction.

The second characteristic is what I call the "wishful thinker" approach. In this approach, a seller sets a list price way up on the range and keeps it there! You might also call this a "wishin' and a hopin'" strategy. Pricing your home using this approach gets a seller frustrated and perhaps even angry at their agent as there will be little or no activity from the marketing effort that will generate a sufficient interest for a buyer or buyers to make offers. The Property History is riddled with listing agent changes!

Keep in mind that with the ability for potential buyers to easily and quickly pour over home listings on the Internet, a buyer won't show up without a compelling reason or reasons to do so.

This leads me to my recommendations for sellers who want to sell their home. Either you know someone who is currently in this predicament or know of someone considering a sale who you would like to save from getting stuck and making costly errors in marketing and pricing their home.

  • Look carefully at your competition. A close look at the Property History of each listing that would be considered your competition is key. Your agent can research and review this revealing information with you, hopefully BEFORE it goes on the market.

  • Price it to add value to the marketplace. All buyers look for value. Value is a combination of price and benefits. Sometimes a higher price is a better value! Why are there so many Lexuses on the road! Though it is important, to add value to the market don't think just of price. More than likely, you'll add value with a combination of price and your home's features and benefits. Examples of features include recent upgrades to the kitchen and bathrooms and ideas of benefits may be about the community or a set of schools.

  • Price it with good information and old-fashioned good advice. Some agents looking for business will accept a listing at any price the seller wants as they think that getting the listing is business and they can always go back to the seller for price reductions employing, you guessed it, the "stair-step" approach described above. It is difficult to locate an agent who will be upfront with advice and current market information and be willing to walk away from a potential listing where the seller is being unrealistic with their price. I have and wish them the best of luck! After all, as a real estate professional, I make an out-of-pocket investment in every listing and would rather not expend a lot of time and marketing money without a reasonable chance to see that sale come to fruition.

If you have questions or feedback, please feel free to leave a comment.

Thanks for reading!

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