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And What's Your Price Today?
Posted by V.K. [Mel] Melhado P.A. on Saturday, February 3rd, 2007 at 3:49pm.For a realtor, pricing a home in a declining market is a major challenge. If you are going to take the listing in the first place, you had better price it correctly, when you first place it on the market, which means being ahead of the curve.
In our market in Naples in Southwest Florida, we seemed to have flattened out, which makes it a bit easier. My goal is to get the price point to where it is in the lower quarter of the current active listings. I do not make price recommendations to the sellers anymore. I have started presenting charts and data reflecting exactly what is going on. I explain that three things affect where the price should be, Active Listings, Sold Listings and Expired Listings. I’ll show them the data for all three and ask the sellers, based on what they saw, where they think the price point should be.
Invariably they will still be higher than where it really should be after reviewing the data, and I ask them again how badly they really want to sell. (Naturally, I have established their motivation prior to my beginning my presentation, but I just want them to reinforce it). Sometimes they will tell what they have to get out of it based on what they paid and I gently tell them that what they paid has nothing to do with what it will eventually sell for. I tell them that there is no relationship between the two.
With regard to pricing in a declining market that has not bottomed out, it is far more difficult. The one thing that I do not want to do is help a seller price their property improperly, where you are forever chasing the market with continual price reductions. Again, in a changing market, I want the price point to be ahead of the curve. In that way I feel that I have the best shot at selling the home within the first 30 days.
V.K. [Mel] Melhado PA
Downing-Frye Realty, Inc.
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