Several years ago, I saw a comic strip that showed a property owner in different conversations about his property. The scenes were all the same except that the person the owner was talking to was different in each scene. As the property buyer in the first scene, he was pointing out all the property flaws to the seller. Talking with the bank appraiser, he was pointing how much better his property was than his neighbors’ properties. When the tax assessor stopped by, the property suddenly became a waste dump, and finally when a prospective buyer was talking with him, the house was the most unique property in the world.
That’s an accurate view of the way we think about our stuff!
When trying to price your property for sale, you have to guard against your ownership bias. The amount that you paid for the property has no bearing on the current market value. The fact that the property has been in your family since Noah walked the earth is meaningless in the market. The attribute that meant the most to you may or may not have any value to prospective buyers.
The open market is a cold and cruel thing. The market’s view of your property can be summed up by Sergeant Joe Friday’s famous phrase “Just the facts, ma’am.” Value is related to the cold, hard facts of the property: location, utility, physical attributes, income and expenses, etc.
If you have decided that you are serious about selling your property, taking a step back and looking at it from a prospective buyer’s point of view is very important. Removing your personal, emotional attachment and optimistic financial goals from the pricing decision are critical. Most often, it is wise to have the assistance of a professional. Selecting a real estate agent, broker, or appraiser who is knowledgeable and actively involved in the market for your type of property is very important. They can give you an unbiased opinion.
One of the first factors for making sure that your property gets noticed is pricing. It has been my experience that when you price your property below the clutter, you will attract attention. By “clutter,” I mean that realm of pricing that is reflective of conditions six months or more ago. In most markets today, an abundance of properties are available and often they have been on the market for a long time and become stale. All of those old listings that are priced based on the old market conditions create a cloud. It is easy for a property to get lost in the crowd when there are so many available. That is particularly true in a declining market. Pricing that seemed reasonable originally could be considered aggressive today.
If your property is in a market segment that is expected to have an increase in the availability of properties over the next six months due to foreclosures or other factors, pricing at the lower end or below currently available comparable properties will potentially increase the attention your property receives. However, reaching the balance between an aggressive asking price and avoiding the impression that the pricing is a “fire sale” number can be tricky. That is why it is essential to have the assistance of a qualified professional that can help you navigate as you fly below the “clouds.”
This post was written by Richard Dempsey who has written 2 posts on LandThink