What’s in a Price?

What’s in a Price?

  • Mary Pettyjohn
  • 07/20/22

What’s in a Price?  Pricing Strategy and Buyer Psychology

Do you ever see a house for sale and wonder out loud:  “Wow, that seems like a good price for that house.” Or, “Hmmm, that seems overpriced.”  As much as you would like to think that pricing a home for sale is done rationally with clear parameters, it doesn’t work that way. You’d like to imagine some sort of a formula that REALTORS would use to calculate exactly how much a house is really worth.  Here is how the conversation often goes with a Seller:

Q:  How much is my house worth?

A:  Well, a similar house down the street just sold for $xxx

Q:  Yes, but my house is much better than that house.  Why isn’t mine worth more?

A:  You have lived in this house for many years and have fallen in love with it and the neighbors and the neighborhood.  The Buyers haven’t had a chance to fall in love with it yet so they may not value it as much as you do.  Your wonderful memories don’t translate into a higher price.

Q:  What if I price it higher than my neighbor so I have room to negotiate down if I have to?

A:  For every dollar higher you list your house, you lose potential buyers who will be turned away only by the price and will not come look at  your house to fall in love with it and be willing to pay a higher price.

Q: OK, what about pricing it really low so we get lots of interested buyers?

A:  This is a strategy that some Brokers use, often to get lots of buyers to come visit, fall in love and create a bidding war with multiple offers.  This also allows the Listing Broker to tout how much over asking price they have been able to generate.

 

Q:  So, how much IS my house worth?

A:  The simple answer is that it depends on the current Buyer pool and how much they are willing to pay for the house.  Today’s buyers may be looking for something different that what YOU like and they will pay more for houses that have more of what they like.

Q:  How can I appeal to today’s buyers so that I can get the highest possible price?

A:  One of the most important things you can do is to remove the sorts of things that a buyer might object to:  Remove the negatives:  For example:  Curb appeal is very important so trim the trees and bushes in front, a fresh coat of paint makes a huge difference, even new house numbers and a new mailbox help.  Inside: fresh paint, replace old carpets, spruce up the hardwood floors, etc.

Q:  What about staging:  Does it really help?

A:  In this area, most definitely.  Staging allows a potential buyer to see your house as they might invision it with THEIR furniture in place.  Staging is not decorating so do expect it to look like a designer home. Staging is just that:  It sets the stage to allow a buyer to imaging what it might look like it if were theirs.  Sometimes if a house is a true tear down (Lot value only), you don’t need to stage.


Thank you to Owen Halliday, DRE01453658 for the article. 

Work With Mary

Buying or selling a home can be one of the most stressful life situations for anyone. My goal is to ensure each client achieves his or her desired results and is 100% satisfied with the outcome, while simplifying the process. My clients leverage my many years of experience, knowledge of the market, and my support team of experts and vendors that know how to get deals done. I am fortunate to call Silicon Valley my home. The stakes are high in Silicon Valley, but when executed properly, the rewards are even greater!