You have to have an easy way to explain your pricing strategy and a real strategy that makes sense. I hear agents talk about solds, solds, solds when pricing a house. I’ve got news for you, if you are pricing based on solds, then you are doing it wrong. You need to use an ACTIVE listing pricing strategy. I know a lot of you have never heard of this because no one talks about a real pricing strategy with clients. Most of agents only talk about solds, they don’t know any different.
I know you probably know how to log on to your local MLS and pull comps and properties that have sold. If you are in a market trending upward, you are probably constantly losing listings to an agent that are pricing properties higher than you are. Some of you may even have the mindset that FSBOs are all overpriced. A lot of agents are probably just getting lucky with their pricing, or pricing the house to get the listing.
In a market rapidly moving upward, taking a listing that is 5% to 10% higher than what you think it will sell for isn’t a big deal. Lots of time the market will catch up. In a trending down market, you have to do the same thing, but price it towards the bottom of what is available.
You have to price ahead of the market! On every listing presentation you need to make a business decision. That decision is, where is the best place for me to have a sign? You choices are the trunk of your car or a sellers from yard.
This is a pricing strategy that not only will get the house sold but will be a lot easier to explain to your sellers than basing your price off of homes that have sold.
The way you price ahead of the market is that you price based on the actives not based on solds. You want to price based on what the listing is actually competing against in today’s market. Buyers buying today are looking at homes for sale and comparing them. They may want to buy a house for the price it sold for 6 months ago, but that house is already gone.
Most agents are pricing homes with solds and are usually underpricing their listings. Pricing based on solds is like driving looking in your rearview mirror, it makes no sense.
The house that sold last month or 6 months ago doesn’t really matter. In the time frame, a serious buyer is really looking to buy, that house will probably never be available again and if it is, it’s going to be at a higher price.
What you do is take the home and pull actual active listings that are comparables from inside the community and/or a radius around the home. If the home is a 3 bedroom 2 bath with a 2 car garage, look up homes that are 3 bedroom 2bath with a garage. Look up actual comparables. With custom homes, this is a little more difficult, but you just compare the homes real features to the features of other available homes.
Usually, unless their home is something very special I want to be priced one of the lowest comparables in the area. Usually, if there are 10 homes in the area, I want to be one of the lowest 3 or 4, and I want to be able to pick out the reasons and features that make my listing better than those 3 or 4.
Those reasons could be anything you can really justify. Things like a new roof, a bigger home lot, more square footage. Things that are actually a plus.
You want to show up to your listing appointment very prepared. I will often print out comparables and make notes on them so I can quickly justify why a house is better or worse than the one I’m trying to list.
The more you prepare with comparables and details about the active listings, the more likely it will be that you will get the listing.
I always pull the active listing real quick before putting together the net sheet. You want everything you do with pulling comparables to support whatever prices you have on your net sheet. Don’t show up with a net sheet and then comparables that tell a completely different story.
Now you guys have a Pricing strategy.