[Sellers] Pricing Strategy

Theses are what I consider the secrets for listing and marketing a property that lead to a sale:

CORRECT PRICING

Competitively price properties sell.  Overpriced properties languish on the market.  Take time to figure out fair market value and price accordingly.  List at the highest price which is supported by objective criteria.  Namely, relevant market data and comparable sales.

FAIR MARKET VALUE

Market value is NOT based on what a seller wants to net; investment cost  or mortgage balance; or what the buyer can afford.  Market value is the amount a buyer is willing to pay and a seller is willing to accept under normal conditions, without duress.

THE “TEST-THE-MARKET” THEORY

Price high to see if a buyer will bite.  Forget it!  This theory costs time and money … more days on the market, more price reductions.

THE “ROOM FOR NEGOTIATION” THEORY

Price high to pad for negotiating room.  A popular approach to pricing, however, it can be as detrimental as the “test-the-market” theory.  Competitively priced properties attract buyers and simulate competition.  They also attract more acceptable offers.

LIST PRICE VS. SALE PRICE

The ratio of list price vs. sales price is calculated once the property sells.  However, part of the relevant market data in pricing is to consider this ratio in the neighborhood of your property.  The ratio is only meaningful as it relates to the last price reduction.  Properties are more likely to sell when in this range.

PRICE PER SQUARE FOOT

“Price per square foot” is an easy number to calculate. Simply divide the price by the number of livable square feet. Since this is an easy calculation, people may rely on it more than they should. It is relevant when comparing comparable properties.  A relevant comparison would be comparing price per square foot of two condos at The Gant. A not-so-relevant comparison would be the price per square foot of a core downtown condominium compared to a ranch on 250 acres. The much publicized statements about price per square foot in Aspen are over-rated, in my opinion.