"I was wondering if we should leave more room to negotiate," my client asked this morning.
I have heard this many times, and it is the biggest mistake sellers make.
They leave too much room to negotiate.
Even in today's market, multiple offers and bidding wars are not unheard of.
But only when the homes are priced correctly.
Buyers today are more cautious and better educated than ever. You will never get a bidding war on an overpriced home.
Homes priced properly from the beginning will get more showing activity, a quicker contract, and a higher average selling price.
When you overprice your home (and that is what you are doing when you leave room to negotiate) the person that should be buying your home may never see it.
Why would they? It is out of their price range.
You never have to accept one penny less then full asking price.
So if you need to sell your home at $345K?? Price it at $349,900.
You will get your home sold.
Ken
To sell your home in Naperville, call me anytime at 630-697-0536.
I get tired of preaching to the choir Ken. I post every time someone listens to me...
I think this is a great perspective. This is a good follow up to your selling a home in less than 2 weeks.
All too often, I see sellers do this. The buyers in the area are shown the overpriced property and it helps sell the competing properties that ARE priced correctly.
The best dialogue I have heard on this issue is the agent telling the seller, "My recommendation is to price your home AT market value and don't negotiate. I would rather bring you ten offers and have you reject nine of them than to bring you no offers at all."
In todays real estate culture just how much a buyer can negotiate is thought of as a sport, regardless of how well the home is listed.
Hi Kathy, Jon, Larry and Paul.
Larry, still working on your River Bend lead!
Hi Jon, that sounds like Floyd Wickman.
Thanks all for stopping by.
Ken
Isn't that the truth! We hear this over and over again. And then when to price needs to be reduced and a buyer brings in an offer the sellers say, but we already came down xxx thousand! Yes, from the unrealistic price! ~Rita
I went and saw Gary Keller speak on his SHIFT TOUR this week and he said exactly the same thing. In this shifting market, sellers need to get ahead of the market, not chase it down. Leaving "extra" room to negotiate is just seller-speak for over pricing and that is the surest way NOT to get a contract on a home in this market.
Great post. We're still seeing quite a few sellers trying to leave "gobs" of room to negotiate which of course, results in the home being overpriced. Always a good topic. Especially these days (in most markets).
At first, I thought the title of your blog meant you didn't need to leave ANY room to negotiate, and then you said, "if you need to sell your home at $345K?? Price it at $349,900". This allows the seller to concede a few thousand which may satisfy the buyer who doesn't want to pay the "full price" offer.
Hi Colleen. I don't mind leaving a little wiggle room. But the lower the asking price, the quicker the sale. I do feel it important to price below the $350k example.
Thanks for commenting.
Hi Brian. Thanks for the kind words.
Ken
Hi Ken,
Your post was great. There are many tools readily available to buyers and sellers now, which can, at times, provide misinformation.
Don't forget me if you learn of anyone moving to "The OC."
Michael
(949) 753-7900
Hi Ken
Another great blog with wonderful advice- I think too many make the mistake thinkning they are leaving room to negotiate and over-price!
Good info, thanks for the post
Rich
Charlotte NC
You got it!!!!!! My line is to price the home to the market and negotiate little to none, always.
Great advice in any market. The twist to this is to determine the price in a sliding market. If the market is taking 3-4 months for homes priced to the market, then price the home at where it will be 3-4 months from now. i.e. if you are declining at 1% a month, reduce the price by 3-4% and you will see the home sell when it should.....within 30-60 days. Most agent do not know how to price in a declining market and get caught....trapped with no way out.
I agree Ken! The seller is in control and can counter if they don't get an offer for asking price (when it is priced right from the start.)Just say no! Everybody wants to *WIN* ... ha! Look at me ... I negotiated... I won! How many other purchases in your life to you negotiate on? Why can't real estate be priced for what it is worth. End of story.
If they need $345K why wouldn't you suggest $345K if the comps support that instead of the odd price of $349,900? I would say go with $345k or $350K but never gas tax pricing on homes due to the nature of how MLS searches work.
This may not work with homes in the $95K-$120K range though as when you are talking about those types of properties, $2000 can be a deal killer.
Hi Ron, Sharon, Tim, Rich, Barbara, and Michael. Thanks for stopping by.
I have lots of thoughts on real estate. Funny little situations always come up to give me something else to write on.
Thanks again for reading.
Ken
Instead of leaving room in the price to negotiate, why not just price the home right for the market and negotiate better? There are a lot of other concessions that can be made besides price.
Morning Ken,
Goot post. Wish more folks would preach the facts this way. Over pricing just drives buyers away.
Hi John and Hal. Thanks for stopping by.
Good morning all and have a great week this week!
Ken
Ah, it's so true, and if only sellers believed this! Lots of good ideas on here for how to make them understand.
KEN - What many sellers don't realize is that overpricing leads to price reductions. As a home price keeps getting reduced, it starts to lead buyers into thinking that there is something wrong with the house.
Hi Adam and Judith. Thanks for stopping by.
I think most sellers do it, and they end up sitting.
Thanks for reading.
Ken
Experience has shown that if a home is priced really well, you don't have to bend, as much.
I have noticed that the sellers in our area are getting much more aggressive these days with their homes. Its a differnt market out there and if you want to sell you need to price aggressively!
I can tell you it is nice when a seller agrees with you - nice comment
Hi John, Jerry, and Casey. Thanks for stopping by.
I find it interesting the way people think.
When they are honest with me, I can sell homes very quickly!
Ken
Yep, all it takes to validate and illustrate this pricing strategy is to do the math with the figures and DOM of the properties you have closed. It's not subjective, it's the facts, maam!
Hi Janna. Thanks so much for reading,
Ken
I would price at $350,000 to get the $325-$350 internet shoppers and the $350-$375 shoppers. :-)
I pride myself on being a great negotiater so I don't like to leave a lot of room in the price; I agree with you to price it right.
Agreed that pricing a home properly is the best strategy for getting a seller the most amount of money. I am seeing a lot of uneducated buyers who don't understand this, though. I keep hearing from buyers, "Well, I"ve been reading, and I know that you need to offer $30,000 less on any property in this market."
I've been talking until I'm blue in the face about local markets and an individual houses' position in it, handing out articles and statistics about my local market. I am finding that pricing a house about $5000 over market is generating the best results because the sellers come down and buyers feel like they're negotiating "a deal."
Oh, the average sale price in my market is around $450K, so that $5000 I mentioned in the above post represents about 1% of the purchase price.
Hi Cindy and Jennifer. Thanks for stopping by.
You ladies are both on the money.
I hope all is well and thanks for reading,
Ken
You're absolutely right Ken. Homes priced properly will generate more interest and sell quickly (even in a slow market). Too often we see overpriced homes that remain on the market for very long periods of time. The market will respond to a correctly priced home.
So true, People thimk of catching the big fish. Also if they haven't been in there home long enough to have any equity.
Hi Jon and Rick. Thanks for stopping by.
Hard to relate to clients. Too many people fishing and not enough selling.
Thanks for reading,
Ken
I have heard clients say this too. I was even guilty of the same before becoming a REALTOR(R). The saying, "when you know better, you do better" is so true.