Owners misunderstandings regarding Pricing

"But we paid more than that for it"
Many owners connect cost with value when in fact there is no direct relationship. What you paid for something has nothing to do with what its worth today. "Sometime, I hear that sellers say that the value of their home should be based upon the cost? Then one should ask, if you had inherited this home, that is, paid nothing for it...what would you try to get for it today?" (Some owners say: As much as we could get.) "Why, when you wouldn't have paid anything for it?" (Well, that doesn't matter...) Right before making an offer, buyers might ask you what the owner paid for it, as if that has any relevance. ; "What if we find out that the owners had inherited this home...how would that affect your offer?"

"But we have so many improvements in it"
Most improvements are made for enjoyment, not resale. Some sellers say: My major improvements have been done just this year.) Many times the owners were not planning on selling their home. So the seller in many instances would have made the improvements even if they were not going to sell their home So increasing the value of the home might not actually happen.

"We need the money"
An owner's need for money doesn't affect the value of the home. Being objective about an asking price can be difficult when driven by a need for money. How much more do you need?" (Determine the net difference.) Why do you need that extra money? There are various reasons, none of which affect the value of their home.) If you don't get that extra amount what will you do" The sellers response many times falls into two fundamental options; sell the home at market and alter things at the other end, or stay here and wait for the home to be worth more. If the seller's decision is to stay, then obviously the need for money exceeds the motivation to move. If you found a home to buy that was $12,000 overpriced, would you pay the extra amount if you knew the owners really needed the money?

"We're moving to a higher priced area"
"We need more money because we're buying in San Francisco and the prices are much higher there."  Because the value of homes is higher at your destination, then your current home will have to sell  for more? Well then, you must be sure not to buy a home there from someone who is moving to Tokyo!" Destination doesn't affect the value of their current home.

"What does it hurt to try it at the upper end of the range?"
The Law of Contrast teaches that people make decisions by comparison. Perception of value is effected by the other options available. A high priced home makes other homes look reasonably priced. One of the effects of overpricing is that your home may be a 'Pinball Listing'. This is a metaphor of how the market reacts to an overpriced home. As in a pinball game where the ball bounces off the bumpers before reaching a scoring position, buyers 'bounce off' an overpriced listing into other homes. Your high price makes all the other homes look like good values.

"Another agent said they'd list it higher"
Sellers mission is to select the best agent, not the best price. An agent has no control over the market, only the marketing plan. Never select an agent based on price. As a seller, you want the best to market your home. You should choose an agent because you feel that he or she will be the best one to handle the marketing of your home, not because they have quoted you a the highest sale price. A common mistake homeowners make is to overprice their home by the greatest amount with the agent who is least competent to attain it.

"We can always come down"
When a home is overpriced it appears that there is something is wrong. Many times a home will sell for less than it could have if it was priced right at the beginning of the listing. Yes you can come down, but most times it may be below market value.

"They can always make an offer"
The only way a qualified buyer can make an offer on your home is if they see it. The problem is, most buyers look up to their price range, peek a bit over, then focus only in their price range. By overpricing, you may put your home into a price bracket where they won't look. The wrong price attracts the wrong buyers. The ones who could afford a market value price won't see it...and the buyers who do see your home won't be interested.

"Couldn't we try it for a couple of weeks?"
The majority of market activity occurs in the first two to three weeks. This is the worst time to overprice, because that's when your best customers see the home.

Most of the marketing activity on a new listing occurs in the first two weeks on the market. So when , you try it for a couple of weeks, look what you're doing. You're overpricing your home during the period of its best activity, then lowering the price after they're gone. It's like having a dinner party on Saturday and having the caterers come on Monday. You should price yourhome at market value so you can capitalize on the best buyers you'll have.