Saturday, February 02, 2008

Avoid The Walk of Shame

by Osman Parvez
----
Price reduction. A month later, another price reduction. A couple of months later, another...

Ouch! When does it end?

When I look at a listing history and see multiple price reductions, I call it a "walk of shame." Why? Because it's shameful for the listing agent, who should know better. It's shameful for the owner too. They should have gotten themselves a better agent.

Strong markets will forgive. In a flat or declining market, overpricing your home can cost you big bucks. If you want maximum value and to sell in a short period of time, don't test the market with a price based on wishful thinking.

Think of it this way. At any given time, there is a pool of potential buyers for your home. If your listing is priced far above comparable homes, buyers will think you're out of touch with reality and ignore your home. They may not even bother to schedule a showing. So a month or two later, you drop the price. Even though it may be priced appropriately now, because of human nature, it's less desirable than newly listed homes. Think about it. People are willing to pay more for scarcity. If they feel like they got a good price and snagged the property before others, it adds desirability. If they think they're sorting through the bargain rack at Nordstrom... well, let's just say that's somewhat less desirable. And obviously, Nordstrom doesn't make as much money on the bargain rack, does it?

First, determine liquidity and market conditions. Before you set your asking price, you need to know how many comparable homes have sold relative to the inventory of comparable homes. This will give you a sense of the market's liquidity. Your agent, an expert in the local market, should be able to provide you with detailed and current information. You should also take into account seasonal trends. Then, you and your agent should physically walk through each listed home and consider how it stacks up against your property. Be sure to use your Buyer's Eye.

Think you're ready to list? No. You're not ready. Have your home professionally staged. Silver Fern Homes, my brokerage, now provide complimentary staging for our clients. If your agent doesn't, I recommend paying for it yourself. it's money well spent. If you want to avoid the walk of shame, set your asking price and list your home only after you've carefully analyzed market conditions and had your property professionally staged. Properties that have been staged sell much faster and at a higher price than unstaged homes, in all market conditions.

Now you're ready. Your agent has walked you through market conditions. Before pricing your listing, you've looked at the market in general and your agent has undertaken an analysis of conditions for homes *just* like yours. You've had your home staged. You're taking advantage of seasonal trends. Your agent is ready to initiate a sales campaign through effective marketing channels. Go ahead, pull the trigger.

If you've done your homework, your property should sell in a reasonable period of time. If you haven't, it will take longer and will sell for a lower price. It's that simple. Of course, conditions change and ultimately the market will do what the market will do. Doing your homework and taking necessary steps doesn't guarantee results but it greatly increases the odds of a sale at the price you want and in a short time period. And you'll probably avoid the walk of shame.

p.s. If you're a buyer looking for a bargain, one strategy is to start with homes that have been on the market the longest. Sellers who have their homes listed for a long time are generally more open to negotiation and sometimes, you can find a diamond in the rough. Although I don't shop at Nordstrom, I enjoy bargain hunting and negotiation. If you'd like to consider Realty Unique to buy or sell your home, please give us a call at 303.746.6896.

image: tinou bao


 ----
Like this analysis?    Subscribe to our client research report.     
Want to get blog updates via email?  Click HERE.       
Ready to buy or sell?  Schedule an appointment or call 303.746.6896. 
You can also like our Facebook page or follow us on Twitter.

As always, your referrals are deeply appreciated.  

--
The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

No comments:

Post a Comment