Agents across the country have the same struggle: how to come to an agreement with the seller on the list price of the home.
The seller almost always thinks their home is worth more than it is (because to them, it IS worth more), but that’s not a great way to introduce a home to the market.
Here’s how to choose a price that makes your seller happy while attracting multiple offers.
Knowing where your seller’s expectations are is very helpful as you craft your pricing strategy.
Ahead of my listing appointments, I send a detailed seller questionnaire that covers everything from contact info to the age of the components to what the seller thinks their house is worth. You can also just ask the question point blank in the meeting.
Use the AVMs
It’s impossible to nail the right price on a house you’ve never seen, yet that’s the first thing a seller wants to know when you sit down with them. So before our appointment, I gather every Automated Valuation Model (Zillow, RPR, Assessed Value, etc.) I can find and drop it into a graph so we can at least tell the seller, “This is what the computers say your house is worth, and this is what buyers and agents will consult when they consider their offers.”
This way, you have something to show them, but since it’s not ‘your’ price, you don’t have to commit to a number yet.
Pie in the Sky
The best way to get a seller to tell you what they really think their house is worth is to ask them for a “pie in the sky” number, even if they think it’s totally unrealistic. Most of the time, this is all the permission they need to tell you straight up the price they want.
When you do your market analysis, analyze the houses around this property that sold for pie in the sky prices and present it to the seller. Usually, they will see very quickly that their price will be lower than this.
Radius data for context
Rather than cherry-pick the ‘comps’, do an analysis of all sales around the property. This will show you and the seller where their property stands in their neighborhood
- Is it the fanciest home among other more modest ones?
- Is it in an up-and-coming area?
- Are there other comparable homes selling nearby or will this be an outlier?
Push it up or Press it down?
Houses rarely sell for the number they’re listed at, and the buyers are the ones who move it around. Once you and your seller have agreed on a target selling price, ask your seller if they would prefer that buyers drive up to that number or negotiate down to it.
In our market, houses that sell over asking do so at an average of 1-2%, so we price our homes at 98-99% of our target selling price, and we almost always exceed that target.
Setting the price of a house is part art, part science, and a whole lot of education and collaboration. But if you are good at educating your seller and including them in the process, you can make a plan where everyone wins.