3 Pricing Strategies to Use When Pricing Real Estate
The Content Below was Transcribed from the video here:
There are really only three ways to price your home, and in this video, I'm going to explain to you the differences of each and why you should team up closely with a real estate professional like myself when choosing a listing strategy to sell your home in 2022.
You might get lucky. You might be one of the people who ends up choosing a listing price and then you get a ton of people, maybe a few offers. On the other hand, you might be one of those unlucky people who ends up pricing your home too high and sitting on the market for 120 plus days. And on the opposite end, you might be pricing yourself so low that you are setting yourself up for potentially being taken advantage of by a savvy buyer or an investor.
But let's break that down for a second, because within the three scenarios that I've just painted for you, there are actually three pricing strategies that real estate agents use all the time to help you come up with great strategies and ultimately help you reach your goals when listing your home.
The first of these strategies is in-line pricing, which is exactly what it sounds like. The best way to describe this pricing strategy is nothing special because you're not doing anything to help yourself stand out among the competition. In this pricing strategy, you might be considering some updates that you made to your home to help you potentially bump up the listing price.
On the opposite end of that spectrum, any buyer that comes to see it will take any issues or problems that they potentially see as a reason to deduct from the pricing of your home. You're probably working to keep your listing price at the level as you want that to be the price you ultimately sell at. But most buyers are going to offer a little bit less with the chances of you potentially coming down to meet them at their offer price.
I don't identify many pitfalls with this pricing strategy. However, if you are going to go this route, the idea is that you are going to want to be flexible. And the reason why I say this is because a lot of people will stick to their listing price and not be open or considering other options when there might be some good offers that are provided for you along the way.
Again, this is not saying that you are not going to get your listing or asking price, but you definitely want to be ready to make any adjustments as you see fit if you are not getting the feedback that you are looking for.
The second listing strategy is called aspirational pricing. This is the pricing that you use when you really aren't in a rush to sell your home. And I say that because it is going to take a long time to sell your property. In this case, buyers are probably giving you offers that are less than your asking price. They know what the market is, right? They see that your home is overpriced and they don't want to spend that much for it.
Generally, what I tend to see anyways is that when buyers aren't working with agents, they like to lowball everything just because they think it's the best way to go about and they can be further from the truth.
When a buyer is working with an agent, chances are that agent knows the area and has done their homework and research and can advise their buyer not to offer the asking price because it really isn't going to make sense for them. They actually might end up losing money in the deal, and they are advising their clients to operate accordingly.
At this pricing level, only a fool or someone really, really, really, really desperate is going to actually give you the asking price for your home. So why would people actually use this as a pricing strategy?
Maybe you have an offering with the highest quality of finishes or a luxury apartment with the best views in the city. Or maybe you just have something that's super unique that isn't like anything else in the area or the location. Maybe there is just an unimaginable concession that's being given at closing.
The problem here is that a lot of people don't have something this spectacular that they're actually going to sell, and it reflects when they choose this pricing strategy and they don't get the buyers or offers they're looking for.
Kudos to you if you do, and you can set that awesome pricing strategy.
The third pricing strategy is called event pricing. I like to call it the. Pricing. This is the intention of specifically setting your home below market value so that you can invite as many people and as many buyers to come through to see what you have to offer as possible. When organized right from the start, this pricing strategy is almost a surefire way to incite a ton of activity around your home and listing. You are probably going to end up in a bidding war, with multiple buyers putting out their highest numbers in order to close in your property.
The biggest challenge with this pricing strategy is that when you are dealing with multiple different parties and multiple buyers, you are risking putting yourself at a disadvantage when it comes to going through all of the information that you're receiving.
Again, if you're doing this alone, that is all the information that you're going to have to go through and discern for yourself. Luckily, if you're working with an agent, we kind of know exactly what to look for and do our best when pre- qualifying buyers so that you don't have to think about any of this.
One example of how this could go terribly, terribly wrong is let's say you receive ten offers for a property and your home is priced at 700,000, and this offer is for 750,000. Well, obviously, because it's the highest offer, you're going to want to take that... right. Mm-Hmm. Well, let's play that out.
Let's say you go with that offer at 750,000, and by the time they do their appraisal, the appraisal comes back super low, maybe above your original asking. But somewhere at 725 K. Now that buyer going to either have to put 25 K down in order to move forward on that property, or they're going to have to back out. And chances are, depending on how much they put down in the first place, especially if it's kind of a co-op, they may not have that money to actually put an additional amount down and move forward.
In that case, you either have to reduce your price to match what the appraisal came in at, or you have to start all over at step one to get as many of those initial offers that you potentially had, and maybe one of them might still be looking, might still be available and might still be open to moving forward on you with your apartment.
That's a lot of ifs that just threw out there. You do not want to put yourself in that situation. It's just not a good move. It'll waste time. And at the end of the day, time is money, especially if you are moving out for you have something else that you need to be moving your money into.
Now, I think I've made it pretty clear about the three different listing pricing strategies that you should use, but the question might be after that how do I know where on the graph my pricing lies? What price exactly is applicable to my home?
Because no matter what kind of home you have, your offering is going to be different from someone else's. So the best way that you can do that is to work with an agent.
What we're going to do when it comes to working with you to find out the listing pricing strategy that works best for your situation is we're going to ask you questions, we're going to consult with you to see what your goals are and what your timeline is and how the listing pricing strategies actually work into your timeline and help you achieve your goals faster.
Once I have that information, I would actually bring to you the competition and show you what has actually closed in the area because that's the most important when actually getting an appraisal, the things that are actually closing. And I'll use that information to determine where your home fits and where your guidelines for that pricing strategy end up lying.
Once we agree on a number together, Triplemint has this awesome pre market platform that is really designed to help you get your home even more exposure to our limited and exclusive portal of buyers who may want to learn more information about your home that we've just priced together before we actually come to the market. And that's just one of the ways that we can eliminate lead time when it comes to listing your home for sale with Triplemint while we are getting it ready together.
This strategy is actually key to making sure that not only that, we have a good listing pricing strategy set from the get go, but it allows buyers to have exclusive access, which means if you set a price and someone likes your offering through our network of buyers, we might even have a quicker sale.
And I would love for you to reach out to me if you wanted to learn more about Triplemint and our awesome pre-market platform. And there they are!
I hope these pricing strategies are helpful and can give you some actionable information on what to do when it comes to listing your home for your own sale. And I encourage you if you loved this video or would like other videos like it, please subscribe, share it with someone you know who might need it and thank you for watching EZ NYC Real Estate where I make New York City real estate easy for you.
Thank you so much. See you soon!
