I recently listed a property in McCormick Ranch for a homeowner that was dead set on their price. There were not many comparable sales in their immediate neighborhood so we had to go with some pending and currently listed properties. A similar home sold in the area for $440,000 so my client was determined to not go a penny below that, especially since they knew the other homeowner and their agent said he could have sold that home for that price many times over.
This is great news for a new seller! Well, if they sold quickly for a high price, so should I. But then another homeowner listed down the street from my client a week before we were to list for just $435,000 and literally in 4 days dropped the price to $419,000! There are several reasons for this but also repercussions from it as well.
For starters, because it’s a similar home, if it sells for the lower price (which is probably will) it will skew the appraisals for my client’s house. If similar homes are selling between $419,000 and $440,000, a comparable sale will probably fall in the middle of that, not on the high end of the spectrum.
The homeowner that dropped their price probably did so to get it sold quickly, which is what will probably happen. They may have purchased another home and need to sell fast, not caring about what this price could do to similar sales in the neighborhood. But remember, they don’t care. They can’t list their property just to help everyone else; the goal is to sell and by pricing it this low, they will probably sell fast.
How often should I drop the price of my house
So what is my client to do?
I first ask what their bottom line is. What’s the lowest they can go to? Not that everyone wants to go that low but there are usually figures that the seller needs, such as a mortgage pay-off, commission paid or bills paid. Anything over this is gravy unless they are planning on buying another home straight away and want to roll the equity into another purchase.
But we tend to see what others are doing and want the high end of that spectrum. “Well, if so and so got that much for their home, I can get more because my home is better,” Yada Yada.
But that’s not always the case. Just because you think you know what your home is worth, the true worth is what people will pay for it.
As agents, we must carefully analyze the market and neighborhood. What worked last year or even last month may not work now. Buyers are different during different times of the year and we have to tailor our marketing to get the most exposure and highest price and often that means pricing it lower to create urgency with multiple bids but that risk doesn’t always work. This is why it really pays to have someone experienced and well-seasoned to know when to list and how to price.
We shall see how this marketing goes. The McCormick Ranch is such a popular place and this is a great price point for anyone so homes sell fairly quickly.