Choosing a Listing Price

Hello, readers. I have been learning so much new material that I've been overwhelmed by all the good topics to blog about. And I've been busy with my class: after I went through the chapters and homework and quizzes, I had to study for a huge test that covered lots of material regarding national real estate laws. There will be more of those tests, so I developed a process of studying the material and doing well on the tests.

I'd like to share with you about finding a listing price when a house is offered for sale. Let's say that you have a house that you want sold. You contact me and I come over to look at the house with you. We reach an agreement that I am going to sell your house. We are going to use an exclusive right-to-sell listing agreement. This means that I will be the agent working for you and I will follow all legal orders you give me about selling the house. In order to help you decide on the selling price, I will provide you some information about:
1. similar houses that were recently sold,
2. houses currently being offered for sale, and
3. those that were taken off the market without being sold.

If you have a range of comparable prices that are gotten from those three groups, you can make a decision. After studying that information, you choose a price that reflects both how soon you want the house sold and how much money you want from the sale. The price will be the compromise of those two wishes.

Of course, most people want the house sold as quickly as possible and for as much money as possible. But it's not often possible to achieve both.

In example 1, the wish is to sell the house as quickly as possible. Let's say that you want the house sold in the next hour. We could list it at $100. Somebody would pay that. If you priced your house at an astonishingly low price, it would increase the chances that someone would hand over the money and buy the house on the spot. You could even say that the land without the house itself is worth at least $100. You would achieve your goal of selling your house as quickly as possible by ignoring your wish to get as much money as possible.

In example 2, the other wish is to get as much money as possible when selling the house. Let’s say you want to list the house for $5,000,000, which is probably nowhere near what you paid for it. How long do you think it would take to get the house sold for that price? In most cases, the house would be on the market until all the other houses are sold and someone really needed a house to live in. If there were no other houses available to be sold & someone really wanted to buy a house, they could pay five million dollars and buy yours. It may take many, many years for that situation to happen, but you would have achieved your goal of selling your house for as much money as possible by ignoring your wish to sell your house as quickly as possible.

Hopefully, this shows you that there is a direct relationship between price and time when it comes to selling a house. The lower the listing price, the sooner it will probably sell, but the less money you will make from the sale. The higher the listing price, the more money you will probably make from the sale, but the longer the house will be on the market.

You tell the buyers a lot about your intentions with the initial listing price of the house. And you tell them even more by the changes in the pricing as the house remains on the market. As a general rule, it makes more sense to not start selling the house until you're ready, and to list it at the most reasonable price you can afford.