Accurate Pricing

When your home is listed for sale on a Tuesday and then on Thursday you have three offers, one of which is at your asking price, what does this tell you? It likely tells you that your home is desirable and this is a nice feeling. It tells you that your broker did a nice job. It tells you that you had better start packing. All of this is wonderful. But what does it tell me? It tells me that your home was too cheap to begin with. It tells me that you have left money on the table. It tells me that your initial pricing was wrong.

When you list your home on a Tuesday and then on a Thursday one year later you receive one offer, and that offer is for 20% less than your asking price, what does this tell you? It tells you that your price is horrible. Nothing else. It doesn’t tell you anything nice about your home or about your clothes or about your broker. It just tells you one thing and that one thing is that your price, assuming it was yours and not your brokers’, was and is horrendous. It tells you that you are mostly a bad seller, with a bad price on the wrong house. It leaves no warm and fuzzy feeling for anyone, ever.

Somewhere in between the two extremes lies the proper pricing, and it isn’t as easy to achieve as you might think. When I price a home, I do not price it to attract multiple buyers within a couple of days. If I did this every time I would be fabulously wealthy, and I would also be a pretty bad agent. Alas, the goal of an agent is to sell the property at a reasonable market price. The goal rarely is to fleece the market and jam some poor unsuspecting buyer into a horrifically overpriced home, though that is usually the goal of the seller who owns such a horrifically overpriced home, the goal instead is to serve the market and at once serve the customers and clients. If a home is worth $500k but the seller wants $800k, is it serving anyone to work overtime to convince a buyer and the market that the home is indeed worth $800k? Of course not.

Lately, there have been some sales that cause a bit of a head scratch. A listing at Buena Vista this spring came to market at $529k and was sold within 5 days for $550k. A cottage in the Loch Vista Club came to market this summer for $199k and was sold for $199k within a day. And last week, a lakefront in Cedar Point came to market at $2.1MM and received an acceptable contract within days. Are these properties somehow fabulously marketed? Are they such rare birds that they attract immeasurable and immediate interest? Or are these properties that simply came to market at prices that were a tad under their true market value? The answer, for those skimming along, is the latter.

Somewhere between flushing out a property and sitting on it for a day or two short of eternity is the proper pricing. If a home sells sells within a month or two of hitting the market, it is likely a safe assertion that the initial pricing was accurate. Likewise, if a home hits the market and receives two offers within the first few days, that doesn’t always mean that the price was too cheap. If the property is a difficult or unique offering, and it sells very quickly, this could well be a reaction from the buyer who stumbled upon it at exactly the right time. The interpretation of this phenomenon is subjective, but any experienced agent can tell the difference between striking gold on the first showing and leaving big heaps of gold on the table.

Now that I didn’t tell you anything you didn’t already know, consider this weekend. All you really need to know is that Lake Geneva has their fireworks in August and so does Williams Bay, so Fontana stars this weekend. Thursday night at the lakefront they will light their exploding ordinance, and you’d be best served to be on some pier or in some boat, watching. There will be plenty of private fireworks displays, and the Grand Geneva may be blasting off a few of their own, as will Delavan Township, but for the Lake Geneva revelers, the Fontana show is the one to see. As for me, I’ll be at an open house Thursday at 521 Wilmette in Williams Bay from 12 pm until 2 pm. I’d like you to stop and see me, but only if you like high end finishes right next to the lake in the $500s.