Money and time, the two biggest things people are concerned about when selling their home. Ironically enough, both of these are related to each other. Some people end up making some assumptions on pricing a home that cost a lot of time. And a lot of times, it also ends up costing money. So when selling a home, how does the power of pricing affect time on the market?
The Power of Pricing
Usually people go one of two routes. They ask too high, or they ask too low. You may be thinking that asking too much is better because someone will just try to undercut you. Eventually you guys will meet in the middle right? Unfortunately this isn’t the reality. People sometimes think of houses like cars, you can barter and argue your way into the price you were hoping for. But usually this just ends up turning off the buyer. But why? It all revolves around fear.
So if they both equal fear, what’s the difference? Well, let’s look at both scenarios. You will see that the fear is vastly different between the two. And our reactions are vastly different as well.
There are two primary scenarios you are going to see:
I love the house – I hate the price = FEAR
I love the house + I love the price = FEAR
Love – Hate = FEAR
So out of the 3 scenarios, this is the most common. You may be thinking, “But if it’s too high, won’t they just low-ball it and I may end up with more than I expected?” People are going to see the home, love it, ask their agent about the pricing; and he’s going to say BOUNCE. I live in Nashville, where the market is definitely in the sellers favour. However, even here you can’t get away with asking too much. And here’s the reason: Buyers have emotions.
If a buyer loves the home but hates the price, they will look for reasons to not love the home.
Even if a buyer absolutely loves your home, their agent is dealing with the same data as yours. So their agent is going to say it’s priced too high and tell them what it’s really worth. At this point, their gut reaction isn’t to low-ball it and hope to meet in the middle. Their gut reaction is to find things wrong with the house so their level of enthusiasm for the home and price start to match. If they hate the price, then they are going to be fearful of buyer’s remorse. Fear of regret is going to drive them away from your home.
So instead of ending up with a lot of offers that are in the range you are hoping for, you’re going to get low-ball offers. On top of that, you will have LESS offers. They will trickle in here and there, and they will be LOW. Plus, as an agent, I can tell you how I’m going to advise my client: “Let’s look at something else, you don’t want to get into a counter-offer fight with someone not serious about selling their home.” Of course, in the end it’s their call. But you best believe fear is going to drive that call no matter how I advise them.
Love + Love = FEAR
If they love both the price and the home, why be afraid? If you price the home right about where it belongs, and maybe even a tad lower, expect competition. People are going to see the home, love it, ask their agent about the pricing; and he’s going to say POUNCE. Next thing you know, you have offers left and right. And guess what happens when you have multiple offers? People try to outbid each other. If you have ever been a buyer involved in a bidding war, you know how bad it is. But being the seller who’s being bid over, that’s awesome.
If a buyer loves the home and loves the price, they will look for excuses to make a higher offer to avoid loosing out on a great deal.
At this point, you don’t have people looking for reasons to not like the house because they don’t like the price. They are looking for excuses to pay more to make sure they get it. That double love starting point makes them fearful. Fear of loss is going to drive them to go the extra mile to get the home. Fear is a powerful emotion. And subject to what we are afraid of, it can make us behave in strange ways. Like paying more than asking price for a house to make sure we get what we love.
So now you have multiple offers on the table. You tell the buyers this, and they want the home because it’s a great deal. They now have a reason to offer more than everyone else. There’s a good chance that by pricing it just a tad low, offers gush in higher and quicker. This is how you sell the home and get what you want out of it. You start by not treating your home like it’s a used car and the buyer is a used car salesman.
There’s a funny quip about if you want to be loved or feared. The reply is “I want you to be afraid of how much you love me”. Ironically enough, that’s exactly the emotion we are soliciting here. Pricing too high leads to fear of regret. Fear of regret leads to looking for a reason to hate something you otherwise love. Pricing just right, or even a bit low, leads to fear of loss. Fear of loss causes us to push harder than we expected to get the thing we love.
And the thing we are going to push with is money. As for the time aspect, the more offers you have on the table and the quicker you have them, the faster the house gets sold. You’ll see agents use Days on Market (DOM) to gauge the desire for a property. The longer we see a house on the market, the more reasonably we can suspect a lot of people have passed it up. Don’t make the haggler’s mistake, use the power of pricing right from the beginning.