PRICING

Pricing is the hardest and most important part of selling a home.

The key factors in selling a home are location, pricing, condition and availability. 

There is nothing you can change about location. 

We encourage you to do the best you can to maximize the condition of your home. For different reasons, some sellers can put a lot of effort/investment into this, while others can’t or won’t do much. 

Availability is two-fold. Buyers need to know the home is for sale and understand its key features, and, they also need to be able to get in the home when it’s convenient for them. The first part is our job, presenting the house in its best light wherever prospective buyers might be looking. The second part is up to the seller. The more flexible a seller can be in meeting specific showing time requests, the better. If buyers can’t visit your home when they want, they will visit others and you may have lost a sale.

However, availability (marketing and access) can’t overcome issues with location, pricing or condition. 

Pricing is the most powerful tool for selling a home.

Our job is to price your home for as much as we realistically think it could sell for. It may never sell for that, but in order to be sure we’ve gotten the most for your home, that’s where we start. 

This strategy has the risk that when we drop the price, if the market doesn’t agree with our pricing, there may be some inference that something is wrong with the home or that the sellers/agents have unrealistic expectations. If we move the price sooner rather than later the chance for this stigma is minimized.

A quick price drop indicates flexibility and a motivation to sell. Lingering on the market for a longer time than typical for current market conditions indicates the opposite and can delay the sale and lower the ultimate price.

As a general rule, every day your home is not on the market it goes up in value. Conversely, every day it is on the market it goes down in value. For that reason full price offers are most likely in the first few days on the market. After the first few days, prospective buyers see that no one else has wanted to pay full price and conclude they shouldn’t either.

What defines a quick price drop?

It depends on the price of the home and market conditions. Higher priced homes take longer to sell and sales take longer in a depressed market. 

For an average Louisville area home ($300,000 to $400,000) in an average market, if 15 people schedule showings (we exclude open house traffic) in a 2 to 4 week period (a showing every to every other day) and there are no offers, it’s clear that the home at that price is interesting to buyers, but not appealing enough. In this case we suggest a 5% price cut. Buyers know they can negotiate with an initial offer of 5% or less off list price. So a lower price reduction isn’t very motivating and often delays the sale, increasing the chance of stigmatizing the home.

However, if over that same period there are significantly fewer visits, for example only 3 to 5 or less over a 2 to 4 week period, it’s a sign that the home pricing is far from compelling. Buyers are not getting the sense that if they don’t buy soon, someone else will. In this case we recommend a 10% price cut and admit that we were too optimistic in our initial pricing — perhaps having under estimated some facet of the home such as location, condition or even the overall strength of the market.

All of these numbers are approximate. Each house and each market is unique. But this provides a general algorithm with which to manage pricing.