Use Caution.
Patterns have a knack for repeating themselves, and as Realtors, we see them in nearly every facet of our day-to-day work.
Let’s use asking prices as an example. It goes something like this:
All indications point to a fair market value of $749,900. There were three recent sales between $738,000 and $742,000. Two of them started higher, but after two price reductions, they found their buyer in that range.
As Realtors, it is not uncommon to encounter sellers who have a misguided understanding of the psychology and strategy of pricing. Let's have a look.
Scenario One.
The Realtor lays out a clear market valuation that the seller agrees with. The home goes on the market and six days later, gets an offer for $740,000.
“We listed it too low!”
Scenario Two.
While the valuation points to $749,900, the seller wants to try a bit higher. They list at $779,900 because “hey, you can always come down, but you can’t go up!”
Activity is decent but the feedback is consistent.
“Nice home, but my buyers want to see more houses.”
Three weeks go by, and the price is reduced to $749,900. A few weeks later and a buyer, seeing that the home has been on the market for nearly two months, decides to try a low offer. Eventually the home sells for $733,000.
“Ok fine, we’ll sell for that, but we’re not happy about it…”
Scenario Three.
Despite that clear market valuation, the seller insists on listing at $799,900. Two weeks pass by with only one showing. The feedback?
“Price seemed too high, so the buyers are going to keep looking”.
Three more weeks go by, and a few more showings trickle in with the same feedback. Now we’re at the two-month mark.
“Geez. I don’t know if this agent is any good. I mean, why aren’t we even getting a low-ball offer!?”
The price is reduced to $775,000, but there’s only one month left on the listing contract.
Fast forward, and the sellers decide they need to try another agent. After all, the first one couldn’t get it done! Agent number two arrives on their white horse, with fresh wind in their sails, and reluctantly, the sellers agree to reduce the price to $749,900.
(See above for who originally recommended that price.)
An offer comes in for $718,000. After four days of sign-backs and some collateral emotional damage, an offer is accepted at $728,000.
The sellers are emotionally worn out and angry. Afterall, it took way longer than they thought and sold for less than it should have.
All three of those scenarios play out every single day, in every city that includes houses for sale and Realtors selling them.
Which brings us back to the title: don't confuse a faster-than-expected sale or a longer-than-expected sale with the skills of the Realtor when the initial pricing strategy wasn't aligned with current market conditions.
Scenario One is the quickest path to less stress and a higher selling price.
Scenario Two will get you to the same destination, but with a few stops along the way.
Scenario Three is taking the wrong exit off the highway and finding yourself stuck on the side of the road with a flat tire.
There are many reasons to hire a Realtor, but pricing strategy and market awareness are among the most critical.
Hire smart—then trust them.