The Importance Of Pricing

The Importance Of Pricing

I received a phone call over the summer from a frustrated seller who had seen one of my online ads. He owned a home in Cary N.C. that he had been trying to sell himself for some time (over 6 months).  When I asked him why he thought his house was on the market for so long he replied: “It’s the right house for the right person and sooner or later someone will buy it”—first red flag for any buyer.  I asked him what he thought it was worth and he gave me a number of $250,000 for a 1500 square foot house.  This would put the price at $167 per square foot, a huge number for an older home of this size!  When I explained the high dollar to square foot ratio, he began to tell me how clean the property was, and the fact that he had painted the walls, and did a little bit of landscaping.  I was polite in telling him that I wasn’t interested in making an offer.

I’ve observed consistent patterns in how over-priced sellers answer basic questions.  They usually start by referring to how clean the house is, the fact that they painted it themselves, that it’s located on a corner lot, the one across the street sold for more etc.  I get lots of calls each month so I don’t invest time in trying to persuade them to rethink their pricing strategy.  Let’s put ourselves in the shoes of the buyer for a moment.  If you had $250,000 in your budget you would want to get the most for your money wouldn’t you?  Let’s say you toured the house described above and then decided to check out a new development.  You discover that you could buy a 2,000 square foot house that included granite countertops, stainless steel appliances, washer/dryer included, built in microwave, dishwasher, 42’ wood cabinets, large walk-in closets, and you could pick your paint colors?  Let’s say the home builder also offered to pay some, or even all, of your closing costs which would give you more money to buy furniture!  Which house do you think you would buy?  Would you spend your hard earned money on a 25 year old house just because the owner said it was clean, and was on a “corner lot”?    What would you do?  Even more importantly what would your spouse be happy with? 

Belief in a product is good, but this type of emotional attachment is the coup-de-grace of real estate sales.  I’ve walked into many older houses that have had tremendous potential, but would require an expensive rehab to command a higher dollar amount.  I once read that “People-Purchase-Properly-Priced-Properties-Pronto!”  If the first house in our example was discounted sufficiently it would have sold in well under 30 days.  Keep in mind as well that if you are selling a home that needs work you must offer a discount over and above the cost of repair.  If the buyer is not incentivized with some “sweat equity” they will opt for a house that doesn’t need work.  After all, do you like to work for free?

 It should be noted that few properties in Wake County can command a whopping $167 per square foot.  Only elite properties in select areas can get that kind of money.  I received the phone call from the above seller during the summer of 2013.  As of this writing, December 2013, that seller still owns the same house.

If you need to sell a house fast in the Raleigh NC area, then visit my webpage and get a free, all cash offer, today!