Yosef's "Top Dollar"
Pricing Strategy
How to sell your home both QUICKLY... and for TOP DOLLAR.
by Yosef Adde
There are 3 Main Factors to Consider when Pricing a Home:But you might be wondering… if my house is worth $1,010,000… I don’t want to just sell it for $1,000,000. How does that benefit me to list and sell for $10,000 less? Well, if you’re in a balanced market… and the most recent comparable homes are clearly saying your home is worth $1,010,000 plus or minus.… then the best way to get over $1,000,000 isn’t to list it for a higher price, but rather to list it at a strategically lower price. That way, you have a strong chance to get a bidding war started and push it well over $1,000,00. The goal is to get it under contract within a small window of time with the highest demand possible and get buyers fighting for your home. Even if some offers are low, you can use this as leverage against buyers submitting higher offers who can afford more to push them higher.
#2 Use a STRATEGIC LIST PRICE instead of listing higher to get BETTER OFFERS
In this day and age… supply is still tight. Instant email blasts and property alerts that thousands of buyers and agents get with a new listing still produces a ton of demand if done right. In most cases, there’s no such thing as pricing a home too low and the best chance you have to get the highest offer is in the first week or two. The market will make sure it gets bid up to its top dollar price… even to possibly an “emotionally driven” higher price over market value... simply because of all the extra buyers that were fighting so hard to get it. 20 years ago or so, pricing strategies were very different. But with technology and the internet, things move very fast. You basically want to compress all the demand out there to get everyone, essentially all at once… in the tightest time frame possible… to submit an offer and fight for your home.
Right now it's taking buyers about 8-10 weeks to find a home on average. So when you go live on the day 1, you have 8-10 weeks of buyers all looking at your house and the ones that have been looking longer tend to be more serious buyers. Next week you only have 1 week of new buyers who are not that serious or urgently looking yet. So the best time to get the highest offer is in the first week and you'll never get that impact again later on after your home has been sitting on the market. So, by going with a lower list price, not only do you get more people viewing it, but you're forcing 8-10x the demand of buyers to come to a decision to submit an offer on your home or not which is extremely powerful.
The more people that will be viewing it… the more the phone rings… and the more work for the listing agent! And yes, all that increased demand drives up the price to yield you the highest possible final offer.
Check out this chart below to see how the right pricing strategy will yield you different results:
To summarize what the chart means… if you list your house at market value, you can expect about 75% of actual buyers out there that are looking for a similar home to show up. But, why is that you may ask? The reason is even if your home is priced perfectly at market value, some buyers may pass over it for very minor things. Perhaps they don’t like the way the direction the home faces or the backyard could be a little bigger or whatever the case may be… and this is very normal when buying a house because it's a very personal and emotional process. You rarely get 100% exactly what you want, and you always end up compromising on something. So, it could be priced perfectly and some buyers in that price point and neighborhood will still pass.
But if you price it 5% below market value, you will get 100% of the buyers looking in that price range to show up. They simply won’t pass up your house for any small issue because they know it’s priced too well to not at least give it serious consideration. If done correctly... like the way I do in my 10 Day Selling System… you compress all the buyers demand into a single day and they all submit their offers at the same time... sort of like an auction. When that happens, you should end up accepting an offer above market value and it will ultimately be sold quickly with less stress and headache for you.
Why does it work like that, you may be asking? Well, because buying a home has nothing to do with logic, it’s an emotional process. As an analytical person myself, it took me a while to really let this sink in. When there are 3 or 4 homes all for sale, that are more or less the same... it's very easy to see them like a commodity with a known value. But when you price your home very competitively, suddenly the whole perception of the home changes... They don't walk in the home with dread about how expensive it is... they walk in with enthusiasm... so that small backyard now seems "cozy" ... the outdated kitchen is "retro chik". Suddenly you have buyers overlooking many things simply because there is such great value and they really want that house!
Let's face it, if a buyer loves the house but doesn't love the price, are they going to submit an offer? No. If they love the price but they don't love the house, will they submit an offer? No. But if they love the house... or even kind of like it... and love the price... will they submit an offer? Yes! Most likely!
When you get multiple buyers that fall in love with your home, FOMO (Fear of Missing Out) kicks in. This is one of the greatest motivators a selling agent can use to get your top dollar for your home. They have no idea when another home like yours will come on the market. They need a house now for their family, their interest rate is locked but not for long... or their 1031 exchange is about to expire... and if there are other people trying to get it they will fight like heck to get it. It's just human nature, you always want what you can't have.
You can take that strategy further and price it at 10% below market value which will drive 200% or more buyers to see the house. I don't recommend this approach for luxury homes over $3 Million but it works great for homes around $500,000 - $2,000,000. This pricing strategy of going 10% below market value isn’t for the faint of heart, but using my 10 Day Selling System, in the end… it will always result in a large bidding war with the highest possible sales price. There is simply no way to price a house too low, the market will always bid it up, but your agent also has to have the skill to get them to bid against each other for the maximum price. So, maybe you're wondering... why would I want 30+ offers on my house when most will be below what I really want? Well because you can use that as leverage with the top bidders... and let them know you have 30 offers (without giving them any clue on the top price) ... and when you tell them that, they'll know right away there will be a major bidding war and their buyer better pony up a much stronger offer or risk losing the house.
If no offers are received by that time, that means for whatever reason, we missed the mark on pricing it properly… or some other market forces are at play such as rising interest rates… or possibly you’re now competing against other homes priced more aggressively. In any case, a quick price adjustment is in order.
When I represent a seller, I check for competing homes every day, and if we’re no longer positioned as the clear and best choice in the neighborhood, I’ll let you know immediately. But the worst thing that can happen is you have an agent that just lets it sit on the market for weeks and months with no adjustment in price. Because at that point, all you’re doing is helping your neighbors sell their homes while you’re scratching your head wondering why your home hasn’t sold yet. And when you do finally get an offer, they’ll be lowball offers that just keep getting lower as time drags on. So, it’s critical to make quick adjustments as needed to stay competitive. You want an agent that will keep you in the game and competing… not just waiting on the sidelines.
There is a proven strategy when it comes to getting top dollar for all homes:
1. A Lower Price causes Higher Perceived Value of your Home.
2. Higher Perceived Value causes More Exposure.
3. More Exposure causes More Showings.
4. More Showings causes More Offers.
5. More Offers causes Multiple Bidding Situations.
6. Multiple Bids cause Buyers to Bid Based on Emotion, not Logic.
7. Getting Buyers to Bid on Emotion causes you to get:
The Highest Top Dollar Sale Price.
This is what my 10 Day Selling System does. So you may be wondering, does this work for every home? Well unless your home is worth $10 Million or more anywhere in LA County… and especially in the South Bay where demand is higher… Based on my analysis of the market data, the answer is YES!
So, my friend... Are you ready to hire a strong agent to… ACTUALLY SELL YOUR HOME? Or are you going to put this off for later and gamble with the market??
Why not give me a call? I'd be happy to answer your questions, like:
1. What is the most your home will sell for?
2. What my strategic listing price recommendation is for your home?
3. How much you can expect to walk way with after the sale?
4. How long we can reasonably expect to get the home under contract and sold?
Call me today at 310-363-7362 without any pressure or obligation. Whether we end up working together or not I'm just happy to be of any assistance.
