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3 bad pricing habits to nip in the bud with your sellers

by Peter Thomas Ricci

Couple-meeting-advisor-buyers-sellers-clients

Just as everyone has an opinion on weather and sports, viewpoints abound on real estate, particularly the methods and prices one should demand when selling a home.

Because of that, your seller clients are likely barraged by misguided advice from well-meaning sources, and below, we’ve detailed three of the most pernicious.

1. Pricing on Feeling – Sellers are emotionally invested in their home, and for good reason. Whether it be lawn care, landscaping, or gardening, homeowners commit considerable amounts of time beautifying their homes.

That pride, though, can have a blinding effect, and it’s often pushed along by friends and family. “You spent an entire summer caring for those lilies,” someone might say, implying that such efforts extend to a home’s price.

Sweet as that comment may be, such details are hardly a factor – any good agent knows that things like comps and square footage dictate price, not sentimentality.

2. Pricing to Make a Profit – Perhaps the saddest misconception in all of housing is that homes always, always sell for a profit. We wish that were true (after all, one wants to make money on their investments), but there are a myriad number of forces that contribute to a home’s value, and nearly all of them are outside of a homeowner’s control.

So although a seller may be stuck on a certain price point to ensure they make a profit, sometimes the market does not support those visions of grandeur.

3. Pricing to Renovations – A bathroom remodel. A deck addition. A major kitchen remodel. Those things have two things in common: they are popular renovations to a home; and relative to other renovations, they recoup a terrible percentage of their cost. According to Remodeling magazine, a remodeled bathroom only recoups 65.7 percent of its cost. Kitchen remodels, meanwhile, recoup 64.9 percent, and deck additions only recoup 64.4 percent.

Sellers often fixate on how much they spent on home improvement projects, but it’s the agent’s job to inject reality into those discussions. By the way, you may be wondering what the most cost-effective renovation projects are? Per Remodeling, they are fiberglass attic insulation, manufactured stone veneers, and garage door replacements, which recoup 116.9, 92.9, and 91.5 percent of their respective costs.

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