Wednesday, November 11, 2009

PRICING:A Rock-Bottom Asking Price Can Pay Off In Today's MarketWe

We all know the perils of overpricing a home. Overpriced properties turn off buyers who can't afford the asking price. Overpricing turns away buyers who can afford the price but who can get more house elsewhere. And an overpriced listing sells your competition's homes before your own. All too commonly, overpricing results in the need for a price reduction to an even lower level than if the home had been priced right from the start.

Right pricing is ideal in a regular market. But when can "underpricing" pay off in a fast sale at the best price? In a market like today's, underpriced properties attract lots of attention. It's not uncommon for the "market" to generate multiple offers -- the kind of competition that bids up the sales price to the right price...or higher. Bank-owned and distressed properties and new homes use underpricing effectively to sell fast because price sells.

When a home first comes on the market there is a window of opportunity to attract the most attention from buyers. To get this attention -- price your home "ahead of the market." If market prices are rising, sellers might be able to be aggressive with a slightly higher price than recent comparable sales. When market prices are falling, smart sellers list below recent comparable sales.

One technique to consider: Estimate the current market price, then subtract -- or add -- 2% to be ahead of declining or rising prices. This pricing strategy puts your home out in front of the opportunity curve while the window of opportunity is still open -- and gets your home sold.

An underpricing strategy can be very effective, yet there are some cautions in this strategy that sellers should consider:

Market determines price. If competition from comparable homes nearby includes numerous bank-owned and distressed properties and new homes, some sellers think underpricing will backfire in a low-priced resale. In fact, if multiple offers or offers over the listing price do not appear, then the seller has not truly underpriced the property; the home is right priced for the market. The sales price buyers are willing to pay for the home is the real value, and that is what the marketplace is telling the seller. Instead, consider creating irresistible buzz about your home with a price that positions it as a value too good to ignore.

Pristine condition is key. Be sure to have your home in move-in condition (clean, de-cluttered and staged) and consider flexible terms for a fast sale. A truly underpriced property will sell start packing before your home goes on the market. Serious sellers who underprice must be ready to move.

Remove your finances from the picture. Buyers of your home do not care about how much you paid for your home, how much you need to realize from the sale or how much you invested in repairs and remodeling. Although it is very difficult, do not let these figures interfere with your pricing strategy; be objective and price your home to sell -- not sit.

Work with a local pro. Hire a real estate professional (like us!) to prepare the marketing plan with offline materials and online listings and photos, and promotion that is in place before the listing comes on the market. A successful underpricing strategy must be ready to move quickly because the rock-bottom price generates immediate interest from the pent-up demand of local buyers.

If you -- or someone you know -- is considering selling a home in the next six months, call me. I'll help you analyze the competition and understand where your property fits into today's market. I'll also help you decide if underpricing is an effective strategy for your particular situation. Whatever you decide, I can help you sell fast and get top dollar in any market. Let me show you how.

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For any of your Real Estate Questions or Needs call Me at 636-294-6061 or Remember “Cribbin Realty” Where Performance Outsells Promises.

Mike Cribbin

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