Every day you open the paper to the same information: The real estate boom is over; it’s a buyer’s market; inventories are at an all time high; nothing is selling. In a way, it’s all true. But, at the same time, we’re seeing numerous bidding wars, over-asking-price offers, and no-contingency offers constantly.
See, the key to selling property in this market (or for that matter, in every market) is creating value in the buyer’s eyes. Buyers determine value by comparison shopping. They look at the price of your home based on its features and benefits and compare it with the features and benefits of similar homes that have sold recently or are currently on the market.
A simple example: Let’s say a car dealership has the make and model that you want for $20,000. Now what if another dealership has the exact same make and model for $20,000, but throws in a CD player and sunroof? You’d buy the second one, right? But, what if the first dealership put the car without the extras on sale for $14,000? There’s a better value with the cheaper one.
So, if you want to increase value, you either:
- Lower the price, or
- Have more features and benefits for the same price
Since it’s generally a bad idea to do major upgrades (financially, it is unlikely that you will recoup your expenses), it is imperative that you price your house aggressively. With a 14-month supply of homes in center city, you need to make sure that you are offering unquestionable value to the buyer.
What about pricing it high and the lowering it later? Not a good strategy, but we’ll deal with that another day.
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