Sellers Must Focus on Pricing

The real estate market has changed tremendously in the last ten years. Sellers must focus on pricing these days if they hope to sell a home in a reasonable amount of time.

Selling a home is always at least a bit of a challenge. Twenty years ago, however, prices were not the major issue buyers looked at. Overall home values were low enough that the difference between a home selling for $190,000 and $200,000 was not really a determinative factor for most sellers. This is no longer the case.

Home values are completely off the charts. Yes, this is still true even though the market is undergoing a rough pullback across much of the country. A $600,000 tract home that has dropped 15 percent in value in Southern California is still selling for $510,000. That’s a lot of money for most people.

Affording a home purchase is a big challenge for many buyers. While the subprime mortgage market is certainly a disaster area, even buyers with great credit still have to take a deep breath before committing to $400,000 in debt. Doing so can lead to some serious pressure and sleepless nights given the fact we seem to be in or entering a recession.

All of this leads to one undisputed fact. Buyers are very sensitive to pricing on homes. Whereas few would bat an eye at the $10,000 difference between homes priced $190,000 and $200,000, the same buyer will certainly do so for a homes priced $600,000 and $590,000. Why, because they can buy either of the first two homes without much financial pain. The second two homes, however, requires them to suffer. In such a situation, that extra $10,000 can make a world of difference in their decision making process.

If you are listing your home for sale, you must acknowledge this price sensitivity and market to it. Figure out the average sales price of comparable homes in your area. Now price your home below that figure. This is the only way you can sell these days. Appraisals don’t matter. Your opinion doesn’t matter. Pricing is everything, so sellers must focus on it to the exclusion of all else. If you don’t, that property is going to take a long time to move.

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