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From my over three decades of real estate experience, I can tell you that the single most important concept in getting the highest possible sales price for a home is understanding "price-point" and the "freshness window." “Price-point” is the list price at which the property will draw 7-10 showings per week, and a serious offer from a qualified purchaser. It is essential that the property be priced at the correct price point during the freshness window. “Freshness window” is the period of time that it currently takes for a high quality, well priced listing to sell. In red-hot markets, the typical freshness window is 7-14 days. In a very good market, the typical freshness window is 14-30 days. In a medium market, the freshness window is 30-45 days. In a bad market, the freshness window can be 45-60 days. Think of a loaf of bread – it is “fresh” for only a certain period of time. After the freshness window ends, it becomes stale, and its value declines. It’s the same with homes. When it takes longer to sell a home than the typical time that properties are selling in (the freshness window), the real estate agents conclude that it is priced incorrectly, the number of showings drop dramatically, and the seller almost always ends up receiving less for the home than they should have obtained!! How do we know if the list price that has been chosen is at the correct price-point? We are at the correct price-point if the list price chosen is generating 7-10 showings per week. If the property is receiving 7-10 showings per week, it is moving toward a serious offer from a qualified purchaser. If the property is not generating 7-10 showings per week, the list price is not correct, and it will not be correct until 7-10 showings occur each week. Price-point is one of the most counter-intuitive aspects of pricing a property. I cannot tell you the number of times in my career that I have seen this concept ignored or misunderstood, leading to failure, and loss of tens of thousands of dollars to the seller. Key point: Get the price to "price-point" during the freshness window, while agents are still showing it! Doing so will get you the highest price in the end, by far, and maximize the odds for success!!! Here is some scenarios of getting a great sales price, versus a not-so-great sales price . . . High Price Scenario: Let’s say that it is a fairly good market, and therefore, the period of time that the listing stays fresh is 14–30 days. We calculate that the fair market value of the home is $500,000. The seller decides that since it is a very good market, she will “fish” for a higher price. If unsuccessful, she will quickly adjust the price to conservative fair market value within the freshness window, in order to avoid having the listing go stale. She lists it at $515,000 for 17 days. It averages only 2 showings/week during this period (at least 7 showings per week must occur to sell a property). On day 18, while still in the freshness window, to avoid going stale she promptly adjusts to fair market value of $500,000. On day 20, she receives six offers, the highest of which is $525,000, which she promptly accepts. She is asked to do little work on the home relating to termite and contractor inspections, due to the competition from the multiple offers. Note that because she did this properly, she achieved a final price that was considerably higher than the home’s actual true market value! This excellent result did not occur accidentally, and occurred only because of the conscious application of the principles mentioned in this briefing! Low Price Scenario: By contrast, we see frequent examples of sellers doing exactly the opposite of these optimum high price practices. As an example, here is a typical low price scenario: The seller agrees that the fair market value of the home is $500,000. She decides to list it higher than its real value, at $515,000. The home averages only 2 showings/week during the first three weeks (at least 7 showings per week must occur to sell a property). Unlike the optimal high-price scenario described above, this seller does not change the list price in spite of receiving less than 7 showings per week. She stays with the a list price that is not generating at least 7 showings per week. The home gets stale very quickly, and the number of showings drops to one every other week, or less (this happens all the time once a listing gets stale). She receives one offer several months later. There is no competition from other offers generating a high sales price. She ultimately receives $470,000 for the home, because the listing got stale. In addition, she is asked, and agrees to, an additional credit to the buyer of $7,000 for work in the termite and contractor inspections on the home. Contrast this with the optimal high-price scenario described above, in which the seller received a final price much higher than the list price, and in which the seller was asked only for minimal credits for work in the termite and contractor inspections, all due to the competition resulting from the multiple offers. Recommended Actions TEST various prices until you arrive at Price Point, BUT get to a price that results in 7-10 showings per week within the Freshness Window, BEFORE the listing gets stale! Let us know once per week how many agents actually showed the home (previews of the home by agents without clients do not count). Other than pricing the home properly, and staging it very well, this is the single most important contribution you can make to getting your home sold, and getting the highest possible sales price for it. We only need the number of showings, we don't need the specific agent name and contact information, unless the same agent shows it more than once. If the same agent shows it more than once, please do let us know the contact information for that agent, because that means they have a serious client. The ONLY barometer of success that counts is how many showings per week we receive. If you are not at price point, via testing, by the end of the freshness window, you will have a stale listing, and IF IT SELLS, it will sell for thousands less than you could & should have gotten! Multiple studies demonstrate that your home will sell at thousands (often tens of thousands) of dollars LOWER than true market value if it isn’t sold (in escrow) by the end of the freshness window. Summary Our clients that implement the ideas in this briefing avoid costly mistakes.
We know that these principles work. This is not speculation. We have personally witnessed these highly predictable principles in action hundreds of times. Obtain the highest possible price by getting to the correct price-point during the freshness window. Warm Regards, Shayne Bowen & Staff |