Psychology in Pricing Your Home Correctly – You Want a Sale, Don’t You?

by Mike Yeo on July 2, 2011

Pricing is both an art and a science. In order to correctly price the house, there is a mathematical formula for market evaluation. It is science. Most buyers and sellers part ways where you should “list” the house at. That is art. Throughout this article, let’s assume that the property has a fair market value of $250,000.

For sellers, they list their house at $259,000 to $275,000 – giving it “room for negotiation”.

In comes the buyer who clearly seen a variety of homes that range from $225,000 to $275,000 for their intended target purchase of something closer to the $250,000.

Put your Buyer’s cap on. Your home (at Fair Market Value of $250K) is priced at $269K. When comparing the homes the buyers have seen, it is fairly clear that your property has similar features to those around the $250K range. However,  you were asking $269K. Then, when the buyers compare the $260K – $275K homes, yours clearly lack some key features for homes priced in that range. The floorplan is different, the overall appearance and feel for the home just doesn’t justify anything over $250K.

The buyers hesitate to put in an offer for fear of making you, the Seller,  feel insulted with the offer. Since there are so many more “correctly” priced home out there, they just move on to giving a fair price to the seller who ask for it. The negotiation process went well and everyone felt they won.

On the other hand, all you wanted was $250K too. But you padded “room for negotiation” that prevented the buyers from submitting an offer to you.

Hence, you sit on the market a little longer and you inconvenienced yourself just a while longer – all for room for negotiation and all you wanted was a fair market price for your home.

There is a psychological game to play in pricing. As for my pricing style, I don’t pad any room for negotiation. That gives you the best value for your home. In fact, if you want to give yourself a sure-win (pricing for motivation), price it slightly below the market value to make it exceptionally attractive. You will sell your home in 2 weeks instead of 2 months.

Pricing is very personal, especially for a seller. This is where the value of an experienced agent comes in – to help guide you in the direction you want to go.

Loreena Yeo and 3:16 team REALTY employ the Systematic Market Approach to Home Selling in the greater Frisco TX areas. We have successfully sold every single home we listed today, except for one. The homeowner who became very ill decided not to sell his house until his health gets better. Read satisfied client testimonials of the Systematic Market Approach Home Marketing plan.

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Loreena Yeo
Frisco TX Realtor® / Broker of 3:16 team REALTY
(214) 783-2210

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Copyright © 2010 by Loreena Yeo (3:16 team REALTY).
Originally Posted on Psychology of Home Pricing

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