Needs Based Pricing is a Bad And Costly Home Pricing Strategy
I paid $1,400,000 and I need $1,650,000
Whenever I go over a home pricing analysis with a seller, I ask them what they think their home should be listed at and why. Invariably, their answer comes back to what they paid for the home, what they put into the home (upgrades, remodeling etc.) or what they need to get out of the sale in order to get to where they want to be. I call this “needs” based pricing. I need to get “X” amount because I paid “Y” and I need “X+some amount” to get to my next place.
In an ideal world this would be great. The value of the home always go up and it always sells for more. However, our recent real estate market has exposed the flaws in this thinking. If you bought your home 2 years ago, it is worth less today. It’s unfortunate, but it’s where our market is at.
When sellers want to price their home based on need versus market value, they invariably overprice the home which results in a home that is likely not to sell. Should it sell, it is only after numerous price reductions. The end result is the seller nets much less than they could have if the property was correctly priced in the first place.
Remember, the market value for any property is what a willing and able buyer will pay for the house given that it has had proper exposure to the market. Pricing a property based on what the seller wants or “needs” is a bad and costly home pricing strategy.
Should you have questions about pricing your home to sell in any market, please contact me directly at 650 917-4250 for a confidential analysis.
