Even properties with everything going for them need to be priced right to sell in a buyer’s market.
Last summer, I worked with a couple who owned a home in a highly regarded neighborhood that had a good history of resale. It was in a desirable location; had character, charm and the kind of unique quality that is a hallmark of picture-postcard communities like theirs.
But more than that, the sellers – whose home was more than 30-years-old – had made substantial renovations and additions, commissioning top area contractors to do the work.
They had all pertinent inspections done prior to listing and promptly addressed any small issue that arose. They had their home appraised. They called on an area expert to de-clutter and stage the home. And even with three young boys, they managed to turn their home into a house for the buyers to view.
We priced their property at its appraisal value, using the square foot price of a nearby home that sold 8 weeks earlier. That home, just a few blocks away – didn’t offer buyers as much as my clients’ home, which had a better location, better amenities and more space.
If ever there was a home that could get away with pricing at appraised value, rather than below appraised value, my clients’ home was it.
Once listed, we blew the horn and beat the drum through broker events, print advertisements, virtual tours, online blogs and good old-fashioned jawboning.
Buyer agents came with buyers, even previewing the home for out-of-town clients. The reviews were stellar. Online inquiries were abundant. All signs gave us reason to expect that a contract would be just around the corner.
Except it wasn’t.
Since 2007, when inventory levels for homes started building up and values readjusting downward, sellers have been asked to do a lot more to be competitive in a buyer-driven market. Inventory levels at the higher end of our local market (over $400,000 where this home was priced) posed more challenges for sellers than homes in the $150,000 – $300,000 range.
My sellers were smart enough to understand the market dynamics and the buyer psychology. They knew, in other words, an adjustment would have to be made. They wanted to get their home sold.
We didn’t just tweak the price. We dropped it 10%! Remember, this is a house we are talking about, not clothing in a department store. A price drop of 10% is a meaningful and attention-grabbing reduction on a house that was originally priced at appraised value. Who wouldn’t want a chance to purchase this home at 10% below appraisal?
That price drop did the trick.
There was a strong increase in showing appointments and the sellers soon got multiple offers. Two came in very close to the adjusted list price. Both offers were competitive, well thought out and similar in many important respects. Both buyers were asked to come back with their highest and best offer the following day.
After careful deliberation, and a profound sense of humility, the sellers selected one of the offers and went under contract. The final offer came in above the adjusted listing price.
I was so glad to see the sellers recoup a large portion of the price decrease they had agreed to and it was gratifying to them to know they’d made the right decision.
Of course, not all meaningful price adjustments will result in multiple offers, but this situation truly turned into a success story for all concerned.
The buyers will be closing on a property that they bought below market value in a neighborhood they want to be in. And the sellers felt like they won too.
I’ve never been mistaken for a riverboat gambler but I understand what it means to increase your odds. Our sellers increased their odds of procuring an offer where there was none.
More than anything the sellers’ ability to adjust their price to a below market value proved to be the single biggest game changer. It made the difference between their waiting indefinitely for that “just around the corner” contract to appear and being able to move on to the next chapter in their lives.
Bill Sahadi, CRS, (Certified Residential Specialist) is the Broker/Owner at Fore Properties in Southern Pines, N.C. and can be reached at email@example.com orr www.foreproperties.com/radio