3 pricing strategies to share with your sellers

When you start working as a listing agent, your clients are going to rely on you to help them determine the right sales price for their homes. It is ultimately the seller’s decision what the list price will be. However, a good agent knows how and when to make recommendations and suggestions to help a seller formulate a list price. There are three basic pricing strategies to keep in mind.

The less you have to change from your initial listing, the better. A list price isn’t set in stone. A seller can change his or her mind and adjust the price at any time. However, that’s not always “good for business,” so to speak. It’s always best to carefully assess the fair market value of a home, then determine the right price from the start.

One pricing strategy is to match the current market value

You might have a client that wants you to conduct a valuation and list his or her house for whatever the current market value happens to be. No lower, no higher. The thing to remember here is that even the best online valuation tools can only provide estimates. So, the question is: Should your client trust the market value estimates 100% and list the house for exactly the estimated value?

It’s possible that an appraiser will value the home at a higher or lower price, which could affect a particular buyer’s ability to secure a mortgage loan. For instance, if a military veteran is seeking a VA-backed mortgage loan, the VA typically will not back an offer that is greater than the appraised value of a home.

Another strategy is to price high on purpose

Sellers who list their homes for more than the current estimated value usually do so for several reasons. Some people are basing their list price on the emotional value of their homerather than its actual worth. Others think that there’s a buyer for every house and someone will eventually be willing to pay the asking price, even if it takes longer to sell. There are also sellers who believe it’s better to price high and then negotiate a lower price.

Many sellers price their homes to spark bid wars

There’s a pricing strategy that often brings in multiple offers on the same home. A seller will list his or her home for less than the market value, hoping that buyers will consider it a great deal and numerous offers will start rolling in. The hope is that the buyers will duke it out with escalation clauses, which will conclude with the accepted offer being a much higher price than the house was listed for to start.

Every home sale is unique and so is every client. Your job as a listing agent is to get to know your clients. What are their goals? What are their needs? Determine which pricing strategy best fits a specific client and go from there.

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