Thanks to Howard J. Turoff, CPA, & Financial Guru
Price, Price, Price
Everyone has heard the old axiom that the three most important things in real estate are location, location and location. From a buyer’s perspective that is often true, but for sellers, the location is effectively fixed, so the single most important decision you will make in selling your Hoboken condo, co-op or house is the initial asking price. There are a universe of people our there looking for whatever it is you have to sell, be it a 1 bedroom condo, a Victorian brownstone, or something else. Some buyers have just started their search, others have been looking for months and have seen everything there is to see in Hoboken. When your unit hits the market and is shown on the Multiple Listing Service (the “MLS”) for the first time, there will be a flood of initial interest that may never be matched. Pricing your unit appropriately is the very definition of “striking while the iron is hot” to achieve maximum return.
Most Things In Life Fall on a Bell Curve
Like most things in life, the real estate sales market can be described as a bell curve. At one end of the spectrum are beautiful properties, in great locations being offered at fair prices. These units sell immediately – often within the first few days after hitting the market. At the opposite end are not-nice, overpriced apartments in less than desirable parts of town. They languish on the market forever (or at least until the price is lowered sufficiently to make them attractive.) The vast majority falls somewhere in the middle – hence the bell curve. See:
Don’t Make The Most Common Real Estate Mistake
Many people have a number in mind when they first decide to sell. That number may be based on what they paid, how much profit they hope to realize, what they espect to pay in closing costs, or how much money their neighbor got when he or she sold last year. If that number is too high, and I tell them that they will have a difficult time selling their place for that amount of money, they will often say to me “Let’s start with that – we can always lower the price later.” That may be true, but in my opinion it is also a huge, irreversable strategic error.
Using a Bazooka to Create a Sense of Urgency
Have you ever gone to a sale at a department store and seen people frantically grabbing at clothing in a discount bin, or watched people fight over t-shirts shot out of the air bazooka during the 7th inning of a ballgame? There is an urgency to getting those bargains because if you don’t get them, the person right next to you will and then they’ll all be gone. Now think back to what I said about the universe of people in the market to buy a condo or house in Hoboken. You will never have a bigger crowd of interested people looking at your unit as when it first hits the market. You want to create that same sense of urgency – that if they don’t make a strong offer RIGHT AWAY, that unit will disappear and it’ll be too late. Overpricing the unit, killing the interest, scattering your crowd and then lowering the price later is a bad strategy.
Remember Goldilocks and the Three Bears
Drastically underpricing a unit is an equally bad practice. If I see a listing that I know is worth $100,000 more than the asking price, I’m texting my buyers looking for that type of property immediately. I’d try to lock up the offer before the seller caught wind that he should be asking for more and I’d try to get it off the market before someone else did offer more. That’d be great for my buyer, but this article is about sales strategies. No – the best strategy to achieve the highest sales prices, is not to overprice, not to undervalue, but to price it just right – you must correctly value your property at or near it’s market rate.
Reasons to be Cheerful
I’d choose a starting price that is just slightly above the fair market value with the understanding that you may be willing to negotiate a little, but that you believe the price is fair and you are somewhat firm. If your agent has done a good job evalutaing the comparable units available that you are competing against, and your started at a fair and reasonable price, there is no reason to believe that you won’t get multiple offers and may in fact get a price above asking. Then when people tell you how lousy the housing market is, you can just smile.
The Donut Proof
One final thought that I’ve put into the format of a Q and A for your reading enjoyment. We’ve all visted the local donut shop at one time or another.
Q: How much do you think it costs them to make those donuts?
A: I’d guess a few pennies.
Q: How much do they get for the donuts?
A: Around $.50 to $.75 depending on where you live.
Q: How do you know they’re fairly priced?
A: If they’re all gone at the end of the day, then they were priced correctly.
Q: If they’re not all sold at the end of the day, are the leftovers worth as much tomorrow?
A: No, there are newer fresher more enticing ones available and the older ones get marked-down. If they don’t sell by the end of the week, you probably won’t even get back the pennies it cost you to make them.
Do not let your condo become stale – sell it while it is hot!