Is Testing The Market With a Higher Price A Good Strategy?

Written by Posted On Tuesday, 22 March 2016 09:57

When we are talking to potential sellers, pricing is typically the number one concern. Sellers are often tempted to overprice because they don’t want to leave any money on the table and they want to make sure they get the most money for their property.

Afterall, who doesn’t want to “try” to get top dollar when selling?

It’s totally understandable, and we get it. Plus we want to get you top dollar as that is one of our goals as your listing agent.

is testing the market with a higher price a good strategy

Let’s start by considering who may want to preview your home & ultimately make an offer.

The buyers.

Typically, most buyers have a budget. They may also be preapproved with a lender for a budget.

When buyers start shopping, they do so by their budget. When buyers hire agents, the agent also sets up the search criteria by the budget.

Today’s consumer is very savvy as they have a lot of information about pricing online, they often know what their money should buy them based on past sales and online home valuations. Experienced agents will know this too.

What happens in reality when you price higher.

If your property comes on the market and it’s overpriced, buyers who are searching for your type of property may not be alerted to your new listing, because the new listing alert will not be sent to them because the pricing is out of their budget bracket.

Next, their agent will probably not be alerted to the new listing because their alerts for this specific buyer and their budget will not hit their radar.

With that said, we always do a huge marketing push with a new listing so everyone is alerted to the new listing whether they are set up on searches or not. We also call our buyer database and buyer agent colleagues to tell them about the new listing.

When a property first hits the market, this is when it will get the most action because this is when we as seller agents push out all of the new marketing. This time is critical.

The first two weeks is when your property will get the most action because it’s a new listing, a new product and anyone waiting for something new, will call to see it.

After that, it can be silent. Almost deafening. Now, you are just waiting for new buyers to come into the market.

Based on National Statistics this is what happens:

1. Priced Right = you should be getting offers
2. Showing but no offers= 4%-6% off the correct price
3. Low showings = 6%-12% off the correct price
4. No showings by 12% the correct price

If you are priced too high, you will know it within the first two weeks as there will be no calls, no showings. It can be super disappointing and discouraging.

Why don’t buyers just look and then lowball?

First, if you are not within their budget price point, they may not even be alerted via online listing alerts or their agent’s listing alerts. Second, if the price is too high, they will figure they cannot afford it and just move on. Plus I have to and tell you that most experienced buyers’ agents will tell their clients that your pricing is too high and that you are probably not a realistic seller.

Making offers can be a time-consuming process for the buyers and their agent. They want to spend time making offers on properties they can actually afford to buy and those where they feel the seller is motivated to sell.

Of course, if you price low, anyone can sell a property.

Pricing low is not the strategy. The strategy is pricing at what the market will bear. We don’t determine the price, the market does. If comparable properties currently under contract and recently sold have sold at “X” amount, this is where your pricing needs to be to sell.

If you overprice, it’s going to be challenging to get buyers interested in seeing the property.

Now there are some very special and unique properties that go against all practices and may sell at the top of the market, but these are often the super luxury properties with unique features. This is a different market than the majority of Miami condos and homes.

You need to know where to position your property in the market and price it accordingly if you want to sell for top dollar and quickly.

Is Testing The Market With a Higher Price A Good Strategy?

If you price your property higher than what the market may bear,  it can be a long road for the selling process. A higher price will make any competition look better and also increase the time to sell. If you price too high, and comparable or better properties start selling before your home sells, they will be setting the new pricing.

This could ultimately lead to your property for selling for even less money than if you had priced it correctly from the beginning.

There are also a lot of other essential steps to selling such as hiring an experienced agent, professional photography and marketing; these allow you to get the most money in today’s market and help you to best position the property amongst your competition.

At the end of the day, pricing is still the number one factor in selling quickly and often for top dollar.

Everyone wants to get top dollar, we get it as we work with sellers every day. However testing the market is not always a good strategy. It’s important to know the comps of your specific property and adjust quickly to get it sold.

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Jamey Prezzi

Top Miami Beach real estate agents at your service…

Jamey and Ognjen Prezzi are top Miami Beach real estate agents backed by the largest real estate company in the United States, One Sotheby's International Realty. We are a husband and wife group specializing in the neighborhoods of Miami BeachSouth BeachBrickellDowntown MiamiCoral Gables and some surrounding areas.  We are partners in life as in business.  Married for over twenty years we run a successful boutique luxury real estate group in Miami Beach.

We help clients buy and sell, high-end condominiums, single family homes and estate properties.

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