Setting the Right Price - Scientifically Proven to Sell Your Home
By John Voket
I am always looking for the best advice for folks who are trying to sell their homes, and to get an honest deal. This brought me to some research published by Ken H. Johnson, Ph.D. of Florida International University. Dr. Johnson is editor of the Journal of Housing Research and guest blogger at Keeping Current Matters (kcmblog.com).
Dr. Johnson recently wrote about the important research of professor John R. Knight, who studied the impact of changing a property’s listing price to produce a sale. Knight also examined the types of property that are most likely to experience a price change.
Findings from Knight’s research indicate that on average, properties undergoing listing price changes take longer to sell, and suffer a price discount greater than similar properties. Furthermore, bigger price changes are found to experience even longer marketing times and greater price discounts.
Finally, as for which properties are most likely to experience a price change, Knight finds that the greater the initial markup, the higher the likelihood that any given property will experience a listing price change.
With that in mind, Dr. Johnson says sellers—as well as brokers/agents—should be aware of the critical necessity of getting the price correct from the start. Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight.
Brokers/agents’ desire to take a listing and get the price right later will ultimately lead to their working harder, according to Knight, and they are not doing their sellers any favors. Thus, an initial and detailed analysis of the proper price is much more critical than many originally thought.
Dr. Johnson found in his own research that the direction (up or down) of the listing price change does not matter. A listing price increase or decrease both lead to similar results found in Knight’s work – longer marketing times and lower prices.
Therefore, get the price right from the beginning. In our next segment, we’ll focus on how to determine that right price from the get-go.