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Should we start with a higher price just to try it?

When listing a home for sale, there are various components that go along with successfully selling the home, but the one that trumps them all is pricing. But, how do you know what the right price is?

When I am doing research on a home to determine what the right list price is I look at homes sold in the area that have similar characteristics. There are some homes that are unique in one way or the other where it is harder to tell the price, but most of the time we can make an educated guess on the sales price based upon the sale of similar homes. However, sometimes when I do this research the number that I come up with is a bit lower than what the homeowner was hoping for. In this situation they almost always ask me “Can we just try it a little higher and see what happens? Maybe someone would be willing to pay that because of the new roof we just put on (or some other feature).” I think that you get your highest and best price in the first 30 days for several reasons:

1) The time when it is new on the market is the time of highest exposure. This is the time when people are driving past the For Sale sign for the first time. Anyone with an automated search on your area gets an e-mail, it has the little “new” star next to it on the MLS. People that are looking to purchase a home are constantly on the lookout for what’s new.

2) The homeowner is still excited. When it’s first on the market selling the home is a high priority. Before each showing they take out the vacuum and dust and straighten and bake cookies so that it smells good. They lovingly turn on all the lights and play soft music to make the home feel inviting. But then, the buyers find a home where there is more value. And then they go through all that trouble again and still no sale. Next showing they maybe don’t dust and fresh vacuum marks aren’t on their mind. As time wears on the homeowner loses motivation to have the home in the best condition possible because they assume failure before the buyer even comes through, and because they’re tired.

3) When it doesn’t sell at first people start to think it’s either overpriced or there’s something wrong with it. Then you lower the price but people are still wondering if that’s as low as it should be. Would you go lower? And even if they like the home they start to feel silly for being the only ones to like it. If it’s so great, why didn’t it sell right away?

4) If for some reason you do find someone who is willing to overpay for the home, the appraiser still has to give their opinion. If it appraises for under the sales price (believe me, it happens) you still have a problem. And the buyer has a problem now too.

When pricing a home, you should try to go as close to market value as you can figure. This is how you get your highest and best and quickest offer (or maybe 2!)