Let’s just start at the beginning: what is an “effective” price?
Simply put, the effective price is the asking price you place on your home that most accurately aligns with both the recent sales activity and the number of homes currently on the market in your immediate area. Getting to this number is best achieved when you can separate your emotion from your clinical quest to get to the truth of what the market is telling you.
This is more easily done if you review the data from the perspective of a buyer looking to buy your home. It’s kind of bizarre at first, but if you have the discipline to analyze what the buyer has to choose from in your marketplace – and consider what recently sold and what those homes had to offer – you’ll find that you can literally divorce yourself from your attachment to your “one of a kind” gem and start to see it as a product whose price either makes fiscal sense or it doesn’t. From this objective state of mind is the most fertile ground to make sound business decisions.
So, you find your place of zen from which to review the data and you set your effective price. What’s in it for you?
- You get offers. And not just “low ball” offers but offers from qualified buyers who are sincere in their effort to purchase your home. And with multiple offers, whatever the upper price point that could be achieved will be achieved because the bidding-up process in most cases drives the price there.
- Luxury of choice. With quality offers, you get to be more discerning. Consider that price is not the only value in any offer: speed to closing, the possibility of a lease-back, or even having the buyer pay for a host of negotiable elements such as the termite work or other fees, are all wonderful assets secured when you price your home effectively.
- Shorter “invasion” process. The most basic of truths when selling your home is that the market is quick to tell you what your home is worth. Because brokers can expose your home to both a local and global market in mere days, those looking to buy what you offer will immediately descend upon you with requests for showings — this means fewer open houses and fewer people trudging through your home.
- Creating urgency. Buyers are very smart. They know what’s available and what sold when and for how much because of the advent of the Internet and its associated transparency. If a buyer walks into your house and deems the asking price “fair,” that buyer knows that other buyers will come to the same conclusion. This collective consciousness – or “fear of loss” – will stir people to act and write offers for your benefit.
- Negotiation strength. Consider that it is much easier to walk away from one buyer when there are other buyers trying to get your attention.
These are just the top five most compelling reasons to steel your nerves and trust that the concept of “effective pricing” will ultimately serve your needs and desires in both the short and long term. I would love to hear from any sellers or prospective sellers out there with a point-of-view or an experience that either supports or challenges this mindset.