THE PRICE IS RIGHT - Estate Media

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Leap Ahead

Welcome, everyone! Happy second-to-last day of February. I always wonder about people born on February 29th. What day do they celebrate their birthday on when it’s not a leap year? In their heads, do they only turn a year older every four years? (I could see the benefit of this, I’m not gonna lie.)

Anyway, today we’re talking about everyone’s favorite subject—pricing strategies! It’s not unlike the three bears, in that you don’t want your price too hot and you don’t want it too cold, so let’s talk about getting it just right!

(Spoiler alert: This is not the Glennda’s guru guest who’ll be with us next week.)

ONCE UPON A TIME WITH GLENNDA

The Right House at the Right Price

Y’all may have noticed that pricing a home now isn’t as straightforward as it was a couple of years ago. Back in 2022, when we came up with the list price, it’s because that’s what we’d determined the house to be worth, easy-peasy-lemon-squeeze-y. If we thought a home should cost $500,000 given the amenities and the comps, there you go, that’s what we’d list.

That’s not the case anymore, no ma’am. Now the list price is more of a marketing strategy than anything. The key here as a listing agent is that you want to name a price that’s going to attract the buyers and get them to literally pay up in the pricing.

For example, a while back, we listed a house at $225,000. Now, how do I say this nicely? That puppy was a big ol’ mess. It was a total fixer-upper, head to toe, top to bottom, and front to back. As soon as I listed it, I went out of town, so I forwarded my phone to Victoria, and oh, my stars, my phone imploded. I am not kidding.

We received hundreds of phone calls. Hundreds. We had 119 showings, plus 75 people showed up at the open house and we didn’t even do anything fancy or fun like a macaroni and cheese food truck.

Do you want to know how many offers we got? 70. We got 70 damn offers and that home went for well over the asking price, because the list price was nothing but a marketing strategy.

Here’s the thing—as an agent, you always want to put yourself in the position of having the buyers chase you, and not vice-versa. That’s why it’s absolutely critical to price the home perfectly to begin with because that’s what gets the buyers to chase you. When the buyers are chasing you, they’re willing to do whatever it takes to get that home.

If we’d have priced that $225,000 place what we thought it was worth, and what we thought the buyers would pay, we’d not have been nearly as successful because it would have flipped the power dynamic. When you have to chase the buyers, you’ll find yourself at a strong disadvantage.

Now, before you say, “Well, then my strategy will be to start really low,” here’s the other side of that example. I saw that a house was coming to the market soon and the listing agent had it priced at $985,000. I was well-acquainted with the area, so I knew the home wasn’t just competitively priced, it was well under market value. I told my buyers about it and I got them in there really quickly. When my clients saw it, they knew they wanted it, no matter what it took.

I asked them, “What is the highest number you’re willing to pay, because that listing price is kind of a joke. It’s going to go for way more than that because it’s so badly underpriced. The agent did her clients a disservice and her pricing strategy is flawed.” My clients came back to me and they said, “We’re willing to go as high as $1,100,000,” so that’s the offer we wrote.

The homeowners got nine offers and the top two were at $1,100,000. My clients were all cash, no contingency, so they got the home. We closed on that lovely property and after it was over, I looked my buyers in the eye and said, “You have no idea how lucky y’all just got. That agent left at least $150,000 on the table because if she’d have priced it at $1,100,000, I guaran-damn-tee you she’d have gotten $1,250,000.”

So, when you’re coming up with a pricing strategy, remember that there’s a fine line between a marketing ploy and underselling your listing. Make sure that you’re pricing the property just under what you expect it to sell at, but not so low that you’re leaving money on the table.