Effective Pricing Strategy in a Slowing Market

Just some thoughts on the local market (Jacksonville, FL) and how to get your home sold in a timely manner and at the top of the range. According to the Northeast Florida MLS in December of 2005 there were 13,271 homes for sale equaling 5.64 months worth of inventory. Fast forward to July 2007 there are 26,065 homes on the market equaling 12.98 months worth of inventory. These statistics can be overwhelming however it's not all doom and gloom. Over 2000 homes sold in July as well. The question is how to be among them.
There are several items that influence selling in the current market and primary among them is pricing strategy. The old strategy was to price the property with room to negotiate, wait for buyer interest and then settle on a price that was agreeable to all. Unfortunately, this pricing strategy will not bring showings. Today's marketplace is on the internet, I think we all agree on that, and that should change everything in our pricing strategy.
In yesterday's market, when prospects looked in newspapers, on television and in magazines they only received limited information about the properties that they saw and they only had access to a limited number of the available properties. This meant that the prospect had to call the agent to get all of the information about a property he was interested in and that gave the agent the opportunity to introduce additional properties the buyer did not know about as well as provide more information about the property that the buyer called about. Agents who were successful at this conversion process prospered and the spectrum of properties that were shown was far greater than it is today.
In today's market the buyer decides what his parameters are and looks on the internet for properties that meet his qualifications. The problem for sellers and listing agents is that when the buyer looks on the internet, instead of getting a few words in the newspaper or a few words and one picture in a magazine, the buyer gets, 5 to 20 photographs of everything in the property, virtual tours, a complete list of features, Google mapping and probably access to the school report. In other words the buyer knows it all before he calls.
If there are 40 properties that may fit the buyer's needs (area, price range, bedrooms, baths, size) he can prejudge all of them prior to calling about any of them. Because the buyer has all of this information the vast majority of buyers are going to call on the same limited number of homes that seem to represent the best value within the buyer's spectrum of needs. This creates a situation where the most competitive houses get an inordinate amount of activity and houses that are priced in the middle of our value range get little to no activity. That means that the old strategy of "leave room for negotiations" is not valid because it creates so little activity that there probably will never be an offer to negotiate.
If you want to compete on the internet that means a seller needs to be in the top 10% of all homes that they are competing with in terms of value, otherwise there simply will not be substantial showing activity. So the new pricing strategy must be to price it very competitively, based on the active competition and not the sold "comps", and then when the buyer is interested hold firmer to the price that you want.
In many fields this is known as "puppy dog" selling. The point being that the best way to sell a puppy is to get it into the purchaser's hands and when he likes it he will find a way to buy it; in the same way the home seller is better negotiating with a buyer after the buyer has been in the seller's house and has made a decision that he wants to write an offer. Now the seller has some leverage to hold close to his asking price, whereas keeping his price high and being "willing to negotiate" simply means there will not be any activity. This is hard for sellers because they have to face up to what they are ultimately going to receive rather than hope that they may do better, but if sellers are going to succeed in selling their property at its highest and best price they must adapt this strategy in order to deal with today's internet buyer.
The second issue is merchandising. Buyers that are not on the internet are riding through the areas that they are interested in, although statistically this only amounts to about 15% of buyer activity it is not something to be overlooked. Now is the time for sellers to look at their property through the buyer's eyes rather than the way most of us see our houses while we live in them. This means that sellers need to insure that lawns are in excellent not just good condition, that windows are freshly cleaned (especially on the first floor in the front of the house), that garages are neatened, closets are cleaned out, rooms are freshly painted and the house "shows well" in all respects. The dollars spent on landscaping and other "clean up" items will be dollars that are recouped when the buyer thinks the property "looks great" rather than "is OK".
Recognizing the shift in the market coupled with unparalleled local, national and international exposure through our extensive marketing plan together we can sell your home. If we can compete for your business let us know! Email us or visit us at our site Team Knapp.