You’ve probably heard me say this before…we, real estate agents, simply were not taught how to discover an asking price correctly.
Frequently, an agent will approach me about a troubled listing by saying, “Jo, I have a house that is not getting showings. What do you think?”
I respond by saying, “It’s over priced.”
“No,” they respond, “I’m sure it’s priced correctly. I did the CMA 3 times. My office mate did a CMA, and my BIC did a CMA and we all agree. The problem is not the price.”
“Okay, how many showing have you had?”
“How long has it been on the market?”
“It’s overpriced.” ”
No, No….you are wrong.”
“Okay, but it is. I will fall on my sword that it’s not overpriced.” Ouch.
That’s an example of a house that was priced just on the CMA. So what was wrong? The trend was falling on the house.
Essentially, we were taught to establish an asking price with the CMA range. So what should we be doing?
Here’s the paradigm shift….Stop thinking about it as a number and begin thinking of pricing as a strategy.
So let’s talk about strategy.
The definition of strategy is: The practice of figuring out the best way to get from here to there.
So given that, we need to know:
What’s the mood of the market on this house? We discover that by identifying the trend in the market for this house.
What does the competition look like
What the CMA is indicating
And, lastly but maybe most importantly….what’s most important to the seller? Time or money.
Now that we know those things, how do we parlay that into a strategy?
You see, as soon as the sign goes in the yard the house just became a product for sale. And all products have economic guidelines. All products, whether an ink pen or a house have to make a decision about which strategy they want to use.
There are only three pricing strategies for a product:
Price the house above the market,
Price below the market, or
Price with the market.
Let me give you an example:
Strategy #1: If the house should be priced here according to the CMA at $230,000 and the market is rising, there’s more demand than supply for this type of house in this location, then there is an opportunity to price the house higher IF the seller values a high price vs. wants to sell quickly AND is willing to take the risk.
Why? Because the seller will have to wait for the price to catch up to the market.
This strategy is only available if the market is rising.
Strategy #2: Pricing with the market is only used under two conditions:
The market was rising and the seller wanted to sell quickly OR the market is balanced and price is most important to the seller
Because when you price with the market you become vanilla so you will have longer to wait.
Strategy #3: Lastly, you can price under the market. Why? Two reasons: you want to sell really quickly or the market is falling.
If you want to hear more we have a great resource for you…..
Our webinar, How to Get a Reasonable Asking Price from an Unreasonable Seller is back by popular demand. Our master trainer, Shanahan Ramos, will be your leader and we have a GREAT giveaway that teaches you how to leverage listings for more clients.
So even if you’ve seen it, you will have Shanahan’s take and the new bonus.
Okay, make sure to sign up for the webinar by clicking here. I’ll see you at the next Strategy Session.