30 May 2007

Positioning vs. Pricing Your Home For Sale

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Pricing for Today’s Market… Or Getting Ahead Of the Pack

When evaluating a property and pricing a home properly how often do you consider  how you will be positioned for competitive properties? In today’s market it’s not enough to look at the comparable sales, while looking at the competition; it’s about getting ahead of it, getting your home home out in front.

Recently while speaking with a seller about a potential price reduction she asked ‘How much of a price reduction do you think we need, $10,000 or more?” and “How do you think that would help?” At that point I decided not to give her the $10,000 figure. I said “Before I answer that, let me take another look again at the competition” and she said “fine”. Now please keep in mind, I felt we had the property priced well from the beginning, however the market was speaking to us both. I remembered something I’ve used very effectively in the past, the importance of positioning vs. pricing. As a seller, you can price it to sell,…or price it to sit with the others, it’s your choice.

On the flip side, in most of the U.S. we’ve experienced an appreciating market for so long, positioning wasn’t a big issue. In fact, if you weren’t at the top of the pricing pyramid you may be leaving money on the table. Yet, in a declining or flat market, the opposite is also true.

After another review (about week four on the market and other area reductions) for my client I found homes in her area were clustered in a similar price range. Her immediate competition (in the neighborhood) was eight other 4 bedroom homes all within about $2,000-$3,000 of each other. After discussion, I suggested she break out of the pack and get ahead of the market and position her pricing just under the competition. That way instead of being in the cluster, she would be ahead of the game. Since prices were continued to soften  in the area, if she didn’t… someone else most likely would. And if they did reduce their price, at that time she would be just following the market downward as opposed to getting ahead of it. She agreed, and positioned herself to be the lowest priced 4 bedroom home for her area. The reduction not a huge nose-dive, yet enough to make a difference by about $5,000. Within about 7 days she accepted an offer not too far off her current asking price and was the only sale in the neighborhood.

So when it comes to pricing remember this important aspect. Thinking of selling? contact Lynda Eisenmann, email: Lynda@PreferredHomeBrokers.com at Preferred Home Brokers.

About the Author

I maintains an active residential re-sale brokerage in Brea, CA, located in Orange County, about 20 minutes north of Disneyland. Contact Lynda directly at (714) 595-1494, or Lynda@PreferredHomeBrokers.com – CA License #00402040

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