Ed. note: My Green Lake thanks Michael Cornell, a local REALTOR®, for sharing his knowledge about Green Lake real estate.  Do you have expertise that you would like to share with the neighborhood?  Please drop us a line!

________

Everyone wants the highest possible price when selling a home. Not everyone understands pricing strategy, the emotions of Buyers, the psychology of numbers and analysis of price point searches.

A good agent knows that pricing a home high will often make for longer market time, pickier Buyers (if any Buyers), more expense and inconvenience for the Seller and an eventual selling price LOWER than would have been achieved by underpricing the home from the start. Sellers’ resistance to accept this reality from the start is often the biggest challenge to getting the home sold quickly for a good price.

Example #1: I recently evaluated a cute, but tiny house on a very small lot in the Green Lake neighborhood. Because of the small square footage, tiny north-facing lot, low ceilings and a few other points, this property didn’t show much value on paper. I was confident I could deliver a price of $510,000 to $525,000 even though stats suggested this home to be a much lower value.

Knowing that $500,000 is a major psychological price point and many Buyers search up to that point, we chose a price of $498,000. We also made arrangements for the Seller to be out of town and unreachable for a couple of days so nobody could get a low offer in front of him too quickly.

We made the home as emotionally appealing as possible and did some pre-marketing to generate BUZZ. I had people wanting to know all about this home BEFORE we were on the market.

When we hit the market at $498,000 there were many, many hits on MLS, on the virtual tour and elsewhere. The open house was like a parade.

By the time the Seller returned to town we had six offers. Several of these offers were from Buyers who were only searching up to the $500,000 price point. If we had priced the home above $500k they would never have seen it. These Buyers went back to their loan officers and increased their loan approval letters to accommodate the higher price they were now anxious to pay for this home.

The successful offer had an escalation clause. Using the other offers to invoke this clause, we got the price up to $525,000.

I also convinced one of the other agents and her Buyers to submit an offer that we accepted in back-up at the same price and made sure the number 1 Buyer knew it. This motivated the first Buyer to ask for absolutely nothing in response to her inspection, even though this was an 84 year old house with numerous flaws and quirks.

Also, the appraiser was questioning our value, but I made sure I met the appraiser at the home myself so I could “sell” her the house too, and show her the signed back-up offer at the same price. This helped us avoid a common current problem, which is low appraisals that destroy sales.

This sale closed quickly with a very motivated Buyer and my Seller was always in a strong position at every point in the transaction. Because of all the competition from others, the Buyer is confident that she got a great deal. Everyone is happy.

Had we started at an asking price of $525,000, many of those potential Buyers would never have known about the home, we would not have had all of those offers, the successful Buyer would have been in a much stronger position to negotiate, the sales price would likely have been lower, we might have needed to make concessions in response to the inspection and the appraisal might have been a challenge.

Example #2: I had a classic home listed at Green Lake that I knew needed to be priced below $1 million for a quick sale at a good price. The Sellers resisted getting the price under that million dollar mark.

We sat for a painfully long time on the market while priced over $1 million. We were missing everyone who searched up to $1 million in asking price. Once we got the price under $1 million, the home sold. Unfortunately, it did not sell for asking price and the Buyers were extremely picky on their inspection, which meant the Sellers made more concessions to get the transaction closed. The Seller admitted, “.. we didn’t take your advice and it cost us.” Even after all this, an appraiser called me later to ask how I got such a high price for that home and told me it was the highest sale price at Green Lake for the last couple of years.

Every situation is different. The same strategy does not work for every home and there are more details than I can possibly write about here, but these are two real life 2010 situations here at Green Lake. If you are interested in selling your home at Green Lake or in another classic city neighborhood in Seattle, give me a call for a free consultation at 206-786-1789.

_____________

Michael Cornell is Chairman of the Green Lake Community Council, My Green Lake’s Site Sponsor, and a REALTOR® specializing in Green Lake and surrounding neighborhoods.  He has not had a listing “expire” (fail to sell) since 1998.