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Big Island

Seller Savvy – Pricing Your Property to Sell

When we have a first conversation about listing your home or parcel of land for sale, I will be asking you questions about why you want to sell, and in what time frame. You will undoubtedly be asking me what competing properties are listed, and what comparable properties have been selling for.

These questions and answers all form part of the equation in picking a listing price for your property. Especially in a buyer’s market, which is what we have today not only in Hawaii, but in most real estate markets, this may be the most important conversation you will have with a listing broker.

If you purchased your property during the boom phase of the market cycle, or even if you just refinanced it a few years ago, or have a neighbor who sold at the peak, you most likely have a number stuck in your mind for what your property is worth.

Rationally, you know we are in a severe economic downturn, that people in your community have lost their homes to foreclosure, and that housing values have fallen dramatically. Emotionally, your home is worth whatever that last appraisal showed.

People selling their primary residence in Hawai’i are often planning to move back to the Mainland, or are staying here, but retiring and downsizing, and they will tell me that based upon their plans the need to clear a certain amount from the sale of their home. So, therefore, they need to sell their property for a particular price and won’t accept a dime less.

Did you hear me take a deep breath?

Because if either of these scenarios applies to you, what I am about to write will probably not change your mind. And unfortunately, your wishful thinking, or your listing agent’s optimism will not change the market’s mind either.

In having the pricing conversation with sellers today, I like to quote two agents, neither of whom is with Hawaii Life, who have been successful in this business for a long time. I had a listing where the sellers had picked a starting price at the very top-end of the comparable I’d provided. It was the kind of unique property that attracted a fair number of showings, but after months on the market we’d had no offers.

The sellers ran into a friend who is also a long-time Big Island real estate broker and asked his opinion. He said, “If your home isn’t selling, it is because of one of two factors: exposure, or price. Hawaii Life is giving you the exposure, so it has to be the price.” Sometimes you need to hear it from someone else. We reduced the price.

When a seller comes to me and asks, “My situation has changed and now I want to know, what price reduction would it take to get an offer in the next 72 hours?” I know there is a price level that will generate that level of buyer interest. That’s what a bank will do on an REO (property they own post-foreclosure) when it hasn’t sold as quickly as they like, and the result is a bidding war! At the other end of the spectrum, I have sellers who say, “I’m prepared to wait a year or two for my property to sell if I can get a higher price.” We see that often with the very high-end, $10+ million properties, for example.

For many sellers, their biggest fear in pricing to sell is that they will price too low and leave money on the table. Another local broker has decided that rather than have this same conversation multiple times through the course of the listing, she has the conversation about price reductions once, at the time of listing. The seller can choose an optimistic price for their property when it goes on the market, but if it hasn’t sold in 45 days, 90 days, 120 days, the price reduction has been already agreed.

I’ve recently adopted this practice and two of my listings have had their automatic reductions. When the sellers hesitated at the appointed date, my question to them was, “Did you hire me to list your property, or to sell your property? The market has not improved in the past 45 days, so if you want to sell within the time frame you asked me to sell your property, we need to signal the market now that you are serious about selling.”

Pricing your property properly is not something your broker recommends to make his or her job easier! It is a business-like approach to the job for which he or she has been hired.

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Catherine Klug, RS

March 9, 2011

Beth: excellent blog! We read so many times in listings remarks the term “priced to sell”… shouldn’t every home be “priced to sell”?

Catherine Klug, RS

March 9, 2011

Beth: excellent blog! We read so many times in listings remarks the term “priced to sell”… shouldn’t every home be “priced to sell”?

Beth Robinson R(B)

March 9, 2011

@ Catherine – You brought a smile to my face. I suspect I have been guilty of using that phrase myself…oops! You are SO right.

Beth Robinson R(B)

March 9, 2011

@ Catherine – You brought a smile to my face. I suspect I have been guilty of using that phrase myself…oops! You are SO right.

Erik Hinshaw

March 9, 2011

As an agent who works primarily with buyers I can’t stress enough how important days on market can be to the psychology of buyers determining what to offer. The longer its been on the market, no matter how recent the price change, the more skeptical the buyer is about the price. In my experience the seller is never stronger than they are those first few weeks on the market. The well priced new properties are the ones my buyers are asking me about and the ones they are eager to make offers on as well. That said a good agent like you Beth is great at getting the word out when you do make a price reduction so that I can let my buyers know what wasn’t a deal yesterday is a deal today.

Erik Hinshaw

March 9, 2011

As an agent who works primarily with buyers I can’t stress enough how important days on market can be to the psychology of buyers determining what to offer. The longer its been on the market, no matter how recent the price change, the more skeptical the buyer is about the price. In my experience the seller is never stronger than they are those first few weeks on the market. The well priced new properties are the ones my buyers are asking me about and the ones they are eager to make offers on as well. That said a good agent like you Beth is great at getting the word out when you do make a price reduction so that I can let my buyers know what wasn’t a deal yesterday is a deal today.

Katie Minkus, R(B)

March 9, 2011

Beth – we’re often told by the experts at seminars that a certain percentage of listings simply “won’t sell.” I bet your actual percentage is a whole lot lower than their theoretical one!!!

Katie Minkus, R(B)

March 9, 2011

Beth – we’re often told by the experts at seminars that a certain percentage of listings simply “won’t sell.” I bet your actual percentage is a whole lot lower than their theoretical one!!!

Beth Robinson R(B)

March 10, 2011

@ Erik – not only are buyer sensitive to “days on market” but a lot of websites tell them whether or not the property was previously listed. Hence taking it off for 30 days or changing agents to reset the clock doesn’t really help any more.
@Katie – everything will sale at a price, that’s why banks sell 100% of their foreclosure inventory, even if they have to take it to auction a second time and accept a very low value.

Beth Robinson R(B)

March 10, 2011

@ Erik – not only are buyer sensitive to “days on market” but a lot of websites tell them whether or not the property was previously listed. Hence taking it off for 30 days or changing agents to reset the clock doesn’t really help any more.
@Katie – everything will sale at a price, that’s why banks sell 100% of their foreclosure inventory, even if they have to take it to auction a second time and accept a very low value.

Pam Deery, R(B)

March 16, 2011

Another interesting and contributing factor to pricing is “trend”. As we cover particular areas of the island, and not the entire Big Island, it is apparent there is a moving and cyclical trend to sales. Just a few years ago, land was selling itself!?
However with the building “craze” at an all time low, values have had to adjust according to demand. Sellers may not follow the trends that we agents are so painfully aware of until it’s mid-way into a cycle. It’s so important to trust your agent to know the facts and follow the experience and advice you hired HER for.

Pam Deery, R(B)

March 16, 2011

Another interesting and contributing factor to pricing is “trend”. As we cover particular areas of the island, and not the entire Big Island, it is apparent there is a moving and cyclical trend to sales. Just a few years ago, land was selling itself!?
However with the building “craze” at an all time low, values have had to adjust according to demand. Sellers may not follow the trends that we agents are so painfully aware of until it’s mid-way into a cycle. It’s so important to trust your agent to know the facts and follow the experience and advice you hired HER for.

Beth Robinson R(B)

March 16, 2011

@Pam – you know the saying, all real estate is local. Sometimes here it is VERY local..for example your recent post about the lack of inventory at Mauna Lani is an example of where we can see the cycle beginning to turn. In other areas, there is still a glut. Knowing the market is the value-added an agent like you will bring to clients.

Beth Robinson R(B)

March 16, 2011

@Pam – you know the saying, all real estate is local. Sometimes here it is VERY local..for example your recent post about the lack of inventory at Mauna Lani is an example of where we can see the cycle beginning to turn. In other areas, there is still a glut. Knowing the market is the value-added an agent like you will bring to clients.

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