Editor's Note: The author, Robert Gash, is Colorado ranch broker with Mossy Oak Properties Colorado Mountain Realty in Durango, Colorado. For more information, visit his website at www.coloradocountrybroker.com!
First of all, let me make this clear--this article is for Sellers--people interested in selling their property.
All of you dreamers, gamblers, and speculators need not keep reading…you know who you are…you often say things like, "I don't have to sell." or "I'm not just going to give it away." or "I know what this property is worth, because I know what I have invested in it." While I certainly respect your opinion, you do not qualify as a Seller for the purposes of this article.
This article was written for people who are ready to sell today, this month, or even this year--so they can turn the page on this chapter of their lives in order to be able to move on to the next one.
Real estate value is determined by supply and demand
In order to be a real Seller--you must understand that the market value of your property in any given market is directly determined by the number of interested Buyers and available properties in that given market.
The market value of your property is not determined by what you paid for it, what you spent improving it or what you need out of it.
The market value is a product of simple supply and demand economics--and the more real Buyers your property gets exposed to--the better.
The goal of any seller should be to get the best price possible in the current market. We're going to discuss how listening to what the market is telling you and adjusting your listing price accordingly can help you accomplish this.
Real Buyers can write offers TODAY!
Since I've taken the time to define what a real Seller is…perhaps I should define what a real Buyer is.
A real Buyer is someone that has engaged a broker to find them a property AND is able to make an offer the second they find the right one.
As a Broker we work with all kinds of Buyers that are in different phases of the buying process, some are investigating areas to move to in a few years, others need to sell something before they are able to buy something else and others simply don't know what they are looking for.
Since this article is directed toward real Sellers, I suppose it's necessary to clarify that the Buyer we are looking for is a real Buyer.
Is your Buyer able to see your listing?
When you decide to list your property, what you are really doing is hiring a broker to expose your property to "the market".
The listing price simply determines which segment of the market and how many Buyers will get to see your listing.
Buyers will only see properties up to the price in which they are looking. Therefore if you are priced too high--certain real Buyers will never even see your listing.
For example, if you price your property at $500,000, but would "really take $450,000"…many real Buyers that are willing to pay up to $450,000 (or even $460,000...$475,00...or even $499,000) will never even see your listing.
You may have arbitrarily selected a listing price that hides your property from a very large number of buyers willing to pay what you would accept.
Today's Buyers know more than they used to
Another problem with pricing your property too high is that today's Buyer is pretty savvy.
The Internet gives most Buyers and Buyer's Agents access to all kinds of information about your property. They know what you paid for it and when, what's recently sold that is similar, and often times--even what you owe.
A property priced too high does not give a Buyer that sense of urgency that they better move on it quick or it might not be around for too long.
If your listing price gives a Buyer an excuse to keep looking or think about it awhile, chances are…they will.
The listing price gives many Sellers the Illusion of control
Instead of thinking of the listing price in terms of "what you're gonna get"--which it most unequivocally isn't--think of the listing price simply in terms of which segment of Buyers will get to see your property.
The listing price only determines how long your property will be listed and what amount of Buyers will get to see it--it does not determine the sales price.
Your decision to accept an offer is what determines the sales price.
This is so important to understand that it bears repeating...
Your decision to accept an offer is what determines the sales price.
If the listing price determined the sales price--properties would never sell for more than what they are listed for, right?
Creating a sense of urgency in Buyers is the best way to drive the sales price up.
Listen to what the market is telling you
A good listing price is substantiated by the amount of activity your property is getting (assuming your broker has done their job and marketed your property correctly).
If you are not getting an appropriate amount--or any for that matter--of Buyer interest at your current listing price, that is a clear-cut indicator that your listing price needs to be lowered.
You see, when a Buyer goes out and looks at properties to purchase, they typically sort through all of the available properties in a certain price range.
If your property is not "making the cut"--you are most likely overpriced compared to the other available properties in your price range and you are being "weeded out" on paper--before they even get in the car.
Little or no Buyer activity? You need to lower your listing price.
Fine tune your listing price to create a sense of "Buyer Urgency"
When Buyer interest begins to picks up, you know you are starting to get in the ballpark with your price. Your property looks good on paper and Buyers think it is worth taking a further look.
A lot of showings with no offers however, is another compelling indicator that your listing price needs to be lowered again.
What the market is telling you is that out of all of the properties the Buyer looked at in a given day (in your price range), your property paled in comparison to the other properties they saw.
A lot of showings with no offers? You need to lower your listing price.
Create a bidding war--in ANY market
How do you ensure that you get the best price possible in today's market? Remember--we are talking about market value here...not what you paid, what you invested or what you need...
...You need to stand out in the crowd.
The perfect listing price will put your property on a pedestal amongst the other listings in your price range. If your property stands out and you are getting a lot of activity…
...there's a very good chance more than one Buyer is taking notice.
Creating a sense of urgency in a Buyer typically results in offers and many times results in two or more Buyers bidding against each other to pay the highest possible price for your property--often times at a much higher price than what it was listed for.
Don't let your listing price stand in the way of a sale
The first key to selling in any market is choosing the right Broker to present your property to the market.
The second key is to not let your listing price stand in the way of your Buyer by really listening to what the market is telling you and making the appropriate adjustments in order to induce good offers.
Sellers need to let go of the illusion of control that the listing price gives them and realize the actual control that comes after the offers come rolling in.
If the market is telling you that your property is worth less than you are willing to accept, perhaps taking it off the market is preferable than turning a deaf ear to it.
But, if selling your property for the best price possible is your desire, make sure you choose a broker that will do his job and guide you through the process, so you can get on to the next great chapter of your life.